Correlation Between Perma Pipe and Caesarstone

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

By analyzing existing cross correlation between Perma Pipe International Holdings and Caesarstone, you can compare the effects of market volatilities on Perma Pipe and Caesarstone 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 Perma Pipe with a short position of Caesarstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma Pipe and Caesarstone.

Diversification Opportunities for Perma Pipe and Caesarstone

0.61

Correlation Coefficient

Perma Pipe  Caesarstone

Poor diversification

The 3 months correlation between Perma and Caesarstone is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Perma Pipe International Holdi and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone and Perma Pipe 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 Perma Pipe International Holdings are associated (or correlated) with Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Perma Pipe i.e., Perma Pipe and Caesarstone go up and down completely randomly.

Pair Corralation between Perma Pipe and Caesarstone

Given the investment horizon of 90 days Perma Pipe International Holdings is expected to generate 0.99 times more return on investment than Caesarstone. However, Perma Pipe International Holdings is 1.01 times less risky than Caesarstone. It trades about -0.05 of its potential returns per unit of risk. Caesarstone is currently generating about -0.29 per unit of risk. If you would invest  1,522  in Perma Pipe International Holdings on December 30, 2024 and sell it today you would lose (175.00) from holding Perma Pipe International Holdings or give up 11.5% of portfolio value over 90 days.

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

Perma Pipe International Holdi  vs.  Caesarstone

Perma Pipe Internati

Risk-Adjusted Performance

Very Weak

Over the last 90 days Perma Pipe International Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Caesarstone

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Perma Pipe and Caesarstone

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

The idea behind Perma Pipe International Holdings and Caesarstone 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.