Correlation Between Protek Capital and Dear Cashmere

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

By analyzing existing cross correlation between Protek Capital and Dear Cashmere Holding, you can compare the effects of market volatilities on Protek Capital and Dear Cashmere 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 Protek Capital with a short position of Dear Cashmere. Check out your portfolio center. Please also check ongoing floating volatility patterns of Protek Capital and Dear Cashmere.

Diversification Opportunities for Protek Capital and Dear Cashmere

0.0

Correlation Coefficient

Protek Capital  Dear Cashmere

Pay attention - limited upside

The 3 months correlation between Protek and Dear is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Protek Capital and Dear Cashmere Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dear Cashmere Holding and Protek Capital 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 Protek Capital are associated (or correlated) with Dear Cashmere. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dear Cashmere Holding has no effect on the direction of Protek Capital i.e., Protek Capital and Dear Cashmere go up and down completely randomly.

Pair Corralation between Protek Capital and Dear Cashmere

Given the investment horizon of 90 days Protek Capital is expected to generate 2.17 times more return on investment than Dear Cashmere. However, Protek Capital is 2.17 times more volatile than Dear Cashmere Holding. It trades about 0.09 of its potential returns per unit of risk. Dear Cashmere Holding is currently generating about 0.04 per unit of risk. If you would invest  0.01  in Protek Capital on October 10, 2024 and sell it today you would earn a total of  0.00  from holding Protek Capital or generate 0.0% return on investment over 90 days.

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

Protek Capital  vs.  Dear Cashmere Holding

Protek Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protek Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Protek Capital is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Dear Cashmere Holding

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dear Cashmere Holding are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Even with relatively abnormal fundamental indicators, Dear Cashmere reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Protek Capital and Dear Cashmere

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

The idea behind Protek Capital and Dear Cashmere Holding 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.