Correlation Between PVH Corp and Plum Acquisition

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

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

Diversification Opportunities for PVH Corp and Plum Acquisition

-0.28

Correlation Coefficient

PVH Corp  Plum Acquisition

Very good diversification

The 3 months correlation between PVH and Plum is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding PVH Corp and Plum Acquisition Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plum Acquisition Corp and PVH Corp 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 PVH Corp are associated (or correlated) with Plum Acquisition. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plum Acquisition Corp has no effect on the direction of PVH Corp i.e., PVH Corp and Plum Acquisition go up and down completely randomly.

Pair Corralation between PVH Corp and Plum Acquisition

Considering the 90-day investment horizon PVH Corp is expected to generate 0.19 times more return on investment than Plum Acquisition. However, PVH Corp is 5.16 times less risky than Plum Acquisition. It trades about -0.35 of its potential returns per unit of risk. Plum Acquisition Corp is currently generating about -0.07 per unit of risk. If you would invest  10,738  in PVH Corp on December 23, 2024 and sell it today you would lose (4,223) from holding PVH Corp or give up 39.33% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	24.59%
Values	Daily Returns

PVH Corp  vs.  Plum Acquisition Corp

PVH Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days PVH Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Plum Acquisition Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Plum Acquisition Corp 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 forward-looking indicators remain fairly stable which may send shares a bit higher in April 2025. The latest fuss may also be a sign of long-term up-swing for the venture sophisticated investors.

Pair Trading with PVH Corp and Plum Acquisition

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

The idea behind PVH Corp and Plum Acquisition Corp 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.