Correlation Between Pentair PLC and Konica Minolta

Can any of the company-specific risk be diversified away by investing in both Pentair PLC and Konica Minolta 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 Pentair PLC and Konica Minolta into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Pentair PLC and Konica Minolta

0.38

Correlation Coefficient

Pentair PLC  Konica Minolta

Weak diversification

The 3 months correlation between Pentair and Konica is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pentair PLC and Konica Minolta in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Konica Minolta and Pentair PLC 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 Pentair PLC are associated (or correlated) with Konica Minolta. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Konica Minolta has no effect on the direction of Pentair PLC i.e., Pentair PLC and Konica Minolta go up and down completely randomly.

Pair Corralation between Pentair PLC and Konica Minolta

Considering the 90-day investment horizon Pentair PLC is expected to under-perform the Konica Minolta. But the stock apears to be less risky and, when comparing its historical volatility, Pentair PLC is 3.05 times less risky than Konica Minolta. The stock trades about -0.31 of its potential returns per unit of risk. The Konica Minolta is currently generating about -0.07 of returns per unit of risk over similar time horizon. If you would invest  406.00  in Konica Minolta on October 11, 2024 and sell it today you would lose (25.00) from holding Konica Minolta or give up 6.16% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Pentair PLC  vs.  Konica Minolta

Pentair PLC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pentair PLC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Even with relatively invariable basic indicators, Pentair PLC is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Konica Minolta

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Konica Minolta are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Konica Minolta reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pentair PLC and Konica Minolta

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

The idea behind Pentair PLC and Konica Minolta 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.