Correlation Between PTC India and Transport

Can any of the company-specific risk be diversified away by investing in both PTC India and Transport at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining PTC India and Transport into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PTC India Financial and Transport of, you can compare the effects of market volatilities on PTC India and Transport and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in PTC India with a short position of Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTC India and Transport.

Diversification Opportunities for PTC India and Transport

0.59

Correlation Coefficient

PTC India  Transport

Very weak diversification

The 3 months correlation between PTC and Transport is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding PTC India Financial and Transport of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and PTC India is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on PTC India Financial are associated (or correlated) with Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport has no effect on the direction of PTC India i.e., PTC India and Transport go up and down completely randomly.

Pair Corralation between PTC India and Transport

Assuming the 90 days trading horizon PTC India Financial is expected to generate 0.8 times more return on investment than Transport. However, PTC India Financial is 1.25 times less risky than Transport. It trades about 0.07 of its potential returns per unit of risk. Transport of is currently generating about 0.04 per unit of risk. If you would invest  1,567  in PTC India Financial on October 26, 2024 and sell it today you would earn a total of  2,015  from holding PTC India Financial or generate 128.59% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	99.8%
Values	Daily Returns

PTC India Financial  vs.  Transport of

PTC India Financial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTC India Financial has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Transport

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transport of has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Transport is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with PTC India and Transport

The main advantage of trading using opposite PTC India and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PTC India position performs unexpectedly, Transport can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Transport will offset losses from the drop in Transport's long position.

The idea behind PTC India Financial and Transport of pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.