Correlation Between PTC INDUSTRIES and Industrial Investment

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

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

Diversification Opportunities for PTC INDUSTRIES and Industrial Investment

-0.87

Correlation Coefficient

PTC INDUSTRIES  Industrial Investment

Pay attention - limited upside

The 3 months correlation between PTC and Industrial is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding PTC INDUSTRIES LTD and Industrial Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Investment and PTC INDUSTRIES 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 INDUSTRIES LTD are associated (or correlated) with Industrial Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Investment has no effect on the direction of PTC INDUSTRIES i.e., PTC INDUSTRIES and Industrial Investment go up and down completely randomly.

Pair Corralation between PTC INDUSTRIES and Industrial Investment

Assuming the 90 days trading horizon PTC INDUSTRIES LTD is expected to under-perform the Industrial Investment. But the stock apears to be less risky and, when comparing its historical volatility, PTC INDUSTRIES LTD is 1.14 times less risky than Industrial Investment. The stock trades about -0.18 of its potential returns per unit of risk. The Industrial Investment Trust is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  26,000  in Industrial Investment Trust on September 16, 2024 and sell it today you would earn a total of  13,170  from holding Industrial Investment Trust or generate 50.65% return on investment over 90 days.

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

PTC INDUSTRIES LTD  vs.  Industrial Investment Trust

PTC INDUSTRIES LTD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PTC INDUSTRIES LTD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Industrial Investment

Risk-Adjusted Performance

24 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Investment Trust are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Industrial Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PTC INDUSTRIES and Industrial Investment

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

The idea behind PTC INDUSTRIES LTD and Industrial Investment Trust 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.