Correlation Between Pressure Technologies and Wizz Air

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

By analyzing existing cross correlation between Pressure Technologies Plc and Wizz Air Holdings, you can compare the effects of market volatilities on Pressure Technologies and Wizz Air 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 Pressure Technologies with a short position of Wizz Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pressure Technologies and Wizz Air.

Diversification Opportunities for Pressure Technologies and Wizz Air

0.23

Correlation Coefficient

Pressure Technologies  Wizz Air

Modest diversification

The 3 months correlation between Pressure and Wizz is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pressure Technologies Plc and Wizz Air Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wizz Air Holdings and Pressure 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 Pressure Technologies Plc are associated (or correlated) with Wizz Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wizz Air Holdings has no effect on the direction of Pressure Technologies i.e., Pressure Technologies and Wizz Air go up and down completely randomly.

Pair Corralation between Pressure Technologies and Wizz Air

Assuming the 90 days trading horizon Pressure Technologies is expected to generate 2.59 times less return on investment than Wizz Air. But when comparing it to its historical volatility, Pressure Technologies Plc is 1.94 times less risky than Wizz Air. It trades about 0.05 of its potential returns per unit of risk. Wizz Air Holdings is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  132,100  in Wizz Air Holdings on October 24, 2024 and sell it today you would earn a total of  14,100  from holding Wizz Air Holdings or generate 10.67% return on investment over 90 days.

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

Pressure Technologies Plc  vs.  Wizz Air Holdings

Pressure Technologies Plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pressure Technologies Plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Pressure Technologies is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Wizz Air Holdings

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Wizz Air Holdings are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Wizz Air unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pressure Technologies and Wizz Air

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

The idea behind Pressure Technologies Plc and Wizz Air 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.