Correlation Between Pioneer Power and Flux Power

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

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

Diversification Opportunities for Pioneer Power and Flux Power

0.4

Correlation Coefficient

Pioneer Power  Flux Power

Very weak diversification

The 3 months correlation between Pioneer and Flux is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Pioneer Power Solutions and Flux Power Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flux Power Holdings and Pioneer Power 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 Pioneer Power Solutions are associated (or correlated) with Flux Power. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flux Power Holdings has no effect on the direction of Pioneer Power i.e., Pioneer Power and Flux Power go up and down completely randomly.

Pair Corralation between Pioneer Power and Flux Power

Given the investment horizon of 90 days Pioneer Power Solutions is expected to under-perform the Flux Power. But the stock apears to be less risky and, when comparing its historical volatility, Pioneer Power Solutions is 2.51 times less risky than Flux Power. The stock trades about -0.15 of its potential returns per unit of risk. The Flux Power Holdings is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  168.00  in Flux Power Holdings on December 28, 2024 and sell it today you would earn a total of  20.00  from holding Flux Power Holdings or generate 11.9% return on investment over 90 days.

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

Pioneer Power Solutions  vs.  Flux Power Holdings

Pioneer Power Solutions

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pioneer Power Solutions has generated negative risk-adjusted returns adding no value to investors with long positions. Despite uncertain performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Flux Power Holdings

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Flux Power Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak basic indicators, Flux Power showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pioneer Power and Flux Power

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

The idea behind Pioneer Power Solutions and Flux Power Holdings 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.