Correlation Between Tessenderlo and Payton Planar

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

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

Diversification Opportunities for Tessenderlo and Payton Planar

0.5

Correlation Coefficient

Tessenderlo  Payton Planar

Very weak diversification

The 3 months correlation between Tessenderlo and Payton is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Tessenderlo and Payton Planar Magnetics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Payton Planar Magnetics and Tessenderlo 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 Tessenderlo are associated (or correlated) with Payton Planar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Payton Planar Magnetics has no effect on the direction of Tessenderlo i.e., Tessenderlo and Payton Planar go up and down completely randomly.

Pair Corralation between Tessenderlo and Payton Planar

Assuming the 90 days trading horizon Tessenderlo is expected to generate 1.18 times more return on investment than Payton Planar. However, Tessenderlo is 1.18 times more volatile than Payton Planar Magnetics. It trades about 0.28 of its potential returns per unit of risk. Payton Planar Magnetics is currently generating about 0.09 per unit of risk. If you would invest  1,882  in Tessenderlo on December 26, 2024 and sell it today you would earn a total of  643.00  from holding Tessenderlo or generate 34.17% return on investment over 90 days.

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

Tessenderlo  vs.  Payton Planar Magnetics

Tessenderlo

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tessenderlo are ranked lower than 21 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Tessenderlo reported solid returns over the last few months and may actually be approaching a breakup point.

Payton Planar Magnetics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Payton Planar Magnetics are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Even with relatively weak basic indicators, Payton Planar may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Tessenderlo and Payton Planar

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

The idea behind Tessenderlo and Payton Planar Magnetics 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.