Correlation Between Power Solution and Samart Public

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

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

Diversification Opportunities for Power Solution and Samart Public

-0.29

Correlation Coefficient

Power Solution  Samart Public

Very good diversification

The 3 months correlation between Power and Samart is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Power Solution Technologies and Samart Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Samart Public and Power Solution 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 Power Solution Technologies are associated (or correlated) with Samart Public. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Samart Public has no effect on the direction of Power Solution i.e., Power Solution and Samart Public go up and down completely randomly.

Pair Corralation between Power Solution and Samart Public

Assuming the 90 days trading horizon Power Solution Technologies is expected to generate 1.67 times more return on investment than Samart Public. However, Power Solution is 1.67 times more volatile than Samart Public. It trades about 0.28 of its potential returns per unit of risk. Samart Public is currently generating about -0.13 per unit of risk. If you would invest  42.00  in Power Solution Technologies on September 27, 2024 and sell it today you would earn a total of  8.00  from holding Power Solution Technologies or generate 19.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.24%
Values	Daily Returns

Power Solution Technologies  vs.  Samart Public

Power Solution Techn

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Power Solution Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Samart Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Samart Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong primary indicators, Samart Public is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Power Solution and Samart Public

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

The idea behind Power Solution Technologies and Samart Public 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.