Correlation Between Puma SE and Techtronic Industries

Can any of the company-specific risk be diversified away by investing in both Puma SE and Techtronic Industries 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 Puma SE and Techtronic Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Puma SE and Techtronic Industries Ltd, you can compare the effects of market volatilities on Puma SE and Techtronic Industries 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 Puma SE with a short position of Techtronic Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Puma SE and Techtronic Industries.

Diversification Opportunities for Puma SE and Techtronic Industries

0.08

Correlation Coefficient

Puma SE  Techtronic Industries

Significant diversification

The 3 months correlation between Puma and Techtronic is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Puma SE and Techtronic Industries Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techtronic Industries and Puma SE 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 Puma SE are associated (or correlated) with Techtronic Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techtronic Industries has no effect on the direction of Puma SE i.e., Puma SE and Techtronic Industries go up and down completely randomly.

Pair Corralation between Puma SE and Techtronic Industries

Assuming the 90 days horizon Puma SE is expected to under-perform the Techtronic Industries. In addition to that, Puma SE is 2.32 times more volatile than Techtronic Industries Ltd. It trades about -0.18 of its total potential returns per unit of risk. Techtronic Industries Ltd is currently generating about -0.06 per unit of volatility. If you would invest  6,566  in Techtronic Industries Ltd on December 30, 2024 and sell it today you would lose (518.00) from holding Techtronic Industries Ltd or give up 7.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Puma SE  vs.  Techtronic Industries Ltd

Puma SE

Risk-Adjusted Performance

Very Weak

Over the last 90 days Puma SE 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 nearly stable which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Techtronic Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Techtronic Industries Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Puma SE and Techtronic Industries

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

The idea behind Puma SE and Techtronic Industries Ltd 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.