Correlation Between Palantir Technologies and PVA TePla

Can any of the company-specific risk be diversified away by investing in both Palantir Technologies and PVA TePla 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 Palantir Technologies and PVA TePla into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Palantir Technologies Class and PVA TePla AG, you can compare the effects of market volatilities on Palantir Technologies and PVA TePla 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 Palantir Technologies with a short position of PVA TePla. Check out your portfolio center. Please also check ongoing floating volatility patterns of Palantir Technologies and PVA TePla.

Diversification Opportunities for Palantir Technologies and PVA TePla

-0.8

Correlation Coefficient

Palantir Technologies  PVA TePla

Pay attention - limited upside

The 3 months correlation between Palantir and PVA is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Palantir Technologies Class and PVA TePla AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVA TePla AG and Palantir Technologies 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 Palantir Technologies Class are associated (or correlated) with PVA TePla. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVA TePla AG has no effect on the direction of Palantir Technologies i.e., Palantir Technologies and PVA TePla go up and down completely randomly.

Pair Corralation between Palantir Technologies and PVA TePla

Given the investment horizon of 90 days Palantir Technologies Class is expected to generate 1.32 times more return on investment than PVA TePla. However, Palantir Technologies is 1.32 times more volatile than PVA TePla AG. It trades about 0.28 of its potential returns per unit of risk. PVA TePla AG is currently generating about -0.05 per unit of risk. If you would invest  4,270  in Palantir Technologies Class on September 21, 2024 and sell it today you would earn a total of  3,151  from holding Palantir Technologies Class or generate 73.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.73%
Values	Daily Returns

Palantir Technologies Class  vs.  PVA TePla AG

Palantir Technologies

Risk-Adjusted Performance

21 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Palantir Technologies Class are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Palantir Technologies reported solid returns over the last few months and may actually be approaching a breakup point.

PVA TePla AG

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PVA TePla AG has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's forward-looking signals remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Palantir Technologies and PVA TePla

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

The idea behind Palantir Technologies Class and PVA TePla AG 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.