Correlation Between Pegasus Tel and KonaTel

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

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

Diversification Opportunities for Pegasus Tel and KonaTel

0.05

Correlation Coefficient

Pegasus Tel  KonaTel

Significant diversification

The 3 months correlation between Pegasus and KonaTel is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pegasus Tel and KonaTel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KonaTel and Pegasus Tel 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 Pegasus Tel are associated (or correlated) with KonaTel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KonaTel has no effect on the direction of Pegasus Tel i.e., Pegasus Tel and KonaTel go up and down completely randomly.

Pair Corralation between Pegasus Tel and KonaTel

Given the investment horizon of 90 days Pegasus Tel is expected to generate 2.23 times more return on investment than KonaTel. However, Pegasus Tel is 2.23 times more volatile than KonaTel. It trades about 0.09 of its potential returns per unit of risk. KonaTel is currently generating about -0.05 per unit of risk. If you would invest  0.05  in Pegasus Tel on October 2, 2024 and sell it today you would earn a total of  0.09  from holding Pegasus Tel or generate 180.0% return on investment over 90 days.

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

Pegasus Tel  vs.  KonaTel

Pegasus Tel

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pegasus Tel are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite fragile technical and fundamental indicators, Pegasus Tel disclosed solid returns over the last few months and may actually be approaching a breakup point.

KonaTel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days KonaTel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's technical and fundamental indicators remain quite persistent which may send shares a bit higher in January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with Pegasus Tel and KonaTel

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

The idea behind Pegasus Tel and KonaTel 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.