Correlation Between PTC and PDF Solutions

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

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

Diversification Opportunities for PTC and PDF Solutions

0.32

Correlation Coefficient

PTC  PDF Solutions

Weak diversification

The 3 months correlation between PTC and PDF is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding PTC Inc and PDF Solutions in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PDF Solutions and PTC 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 PTC Inc are associated (or correlated) with PDF Solutions. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PDF Solutions has no effect on the direction of PTC i.e., PTC and PDF Solutions go up and down completely randomly.

Pair Corralation between PTC and PDF Solutions

Considering the 90-day investment horizon PTC Inc is expected to under-perform the PDF Solutions. But the stock apears to be less risky and, when comparing its historical volatility, PTC Inc is 1.32 times less risky than PDF Solutions. The stock trades about 0.0 of its potential returns per unit of risk. The PDF Solutions is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,010  in PDF Solutions on September 20, 2024 and sell it today you would earn a total of  34.00  from holding PDF Solutions or generate 1.13% return on investment over 90 days.

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

PTC Inc  vs.  PDF Solutions

PTC Inc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, PTC may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PDF Solutions

Risk-Adjusted Performance

2 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PDF Solutions are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, PDF Solutions is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with PTC and PDF Solutions

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

The idea behind PTC Inc and PDF Solutions 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.

Check out your portfolio center.

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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.