Correlation Between PAX Global and Informa PLC

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

By analyzing existing cross correlation between PAX Global Technology and Informa PLC ADR, you can compare the effects of market volatilities on PAX Global and Informa PLC 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 PAX Global with a short position of Informa PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of PAX Global and Informa PLC.

Diversification Opportunities for PAX Global and Informa PLC

-0.61

Correlation Coefficient

PAX Global  Informa PLC

Excellent diversification

The 3 months correlation between PAX and Informa is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding PAX Global Technology and Informa PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Informa PLC ADR and PAX Global 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 PAX Global Technology are associated (or correlated) with Informa PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Informa PLC ADR has no effect on the direction of PAX Global i.e., PAX Global and Informa PLC go up and down completely randomly.

Pair Corralation between PAX Global and Informa PLC

Assuming the 90 days horizon PAX Global is expected to generate 3.01 times less return on investment than Informa PLC. In addition to that, PAX Global is 1.26 times more volatile than Informa PLC ADR. It trades about 0.01 of its total potential returns per unit of risk. Informa PLC ADR is currently generating about 0.05 per unit of volatility. If you would invest  1,997  in Informa PLC ADR on December 28, 2024 and sell it today you would earn a total of  115.00  from holding Informa PLC ADR or generate 5.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	93.44%
Values	Daily Returns

PAX Global Technology  vs.  Informa PLC ADR

PAX Global Technology

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PAX Global Technology are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, PAX Global is not utilizing all of its potentials. The recent stock price disturbance, may contribute to mid-run losses for the stockholders.

Informa PLC ADR

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Informa PLC ADR are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly fragile basic indicators, Informa PLC may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with PAX Global and Informa PLC

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

The idea behind PAX Global Technology and Informa PLC ADR 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.