Correlation Between Park Electrochemical and TuHURA Biosciences

Can any of the company-specific risk be diversified away by investing in both Park Electrochemical and TuHURA Biosciences 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 Park Electrochemical and TuHURA Biosciences into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Park Electrochemical and TuHURA Biosciences, you can compare the effects of market volatilities on Park Electrochemical and TuHURA Biosciences 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 Park Electrochemical with a short position of TuHURA Biosciences. Check out your portfolio center. Please also check ongoing floating volatility patterns of Park Electrochemical and TuHURA Biosciences.

Diversification Opportunities for Park Electrochemical and TuHURA Biosciences

-0.51

Correlation Coefficient

Park Electrochemical  TuHURA Biosciences

Excellent diversification

The 3 months correlation between Park and TuHURA is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Park Electrochemical and TuHURA Biosciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TuHURA Biosciences and Park Electrochemical 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 Park Electrochemical are associated (or correlated) with TuHURA Biosciences. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TuHURA Biosciences has no effect on the direction of Park Electrochemical i.e., Park Electrochemical and TuHURA Biosciences go up and down completely randomly.

Pair Corralation between Park Electrochemical and TuHURA Biosciences

Considering the 90-day investment horizon Park Electrochemical is expected to generate 0.23 times more return on investment than TuHURA Biosciences. However, Park Electrochemical is 4.41 times less risky than TuHURA Biosciences. It trades about 0.05 of its potential returns per unit of risk. TuHURA Biosciences is currently generating about -0.04 per unit of risk. If you would invest  1,314  in Park Electrochemical on October 4, 2024 and sell it today you would earn a total of  151.00  from holding Park Electrochemical or generate 11.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Park Electrochemical  vs.  TuHURA Biosciences

Park Electrochemical

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Park Electrochemical are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady forward-looking signals, Park Electrochemical may actually be approaching a critical reversion point that can send shares even higher in February 2025.

TuHURA Biosciences

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days TuHURA Biosciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Park Electrochemical and TuHURA Biosciences

The main advantage of trading using opposite Park Electrochemical and TuHURA Biosciences positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Park Electrochemical position performs unexpectedly, TuHURA Biosciences 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 TuHURA Biosciences will offset losses from the drop in TuHURA Biosciences' long position.

The idea behind Park Electrochemical and TuHURA Biosciences 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.