Correlation Between Trellus Health and Pressure Technologies

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

By analyzing existing cross correlation between Trellus Health plc and Pressure Technologies Plc, you can compare the effects of market volatilities on Trellus Health and Pressure Technologies 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 Trellus Health with a short position of Pressure Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Trellus Health and Pressure Technologies.

Diversification Opportunities for Trellus Health and Pressure Technologies

-0.79

Correlation Coefficient

Trellus Health  Pressure Technologies

Pay attention - limited upside

The 3 months correlation between Trellus and Pressure is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Trellus Health plc and Pressure Technologies Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pressure Technologies Plc and Trellus Health 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 Trellus Health plc are associated (or correlated) with Pressure Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pressure Technologies Plc has no effect on the direction of Trellus Health i.e., Trellus Health and Pressure Technologies go up and down completely randomly.

Pair Corralation between Trellus Health and Pressure Technologies

Assuming the 90 days trading horizon Trellus Health plc is expected to under-perform the Pressure Technologies. In addition to that, Trellus Health is 1.51 times more volatile than Pressure Technologies Plc. It trades about -0.37 of its total potential returns per unit of risk. Pressure Technologies Plc is currently generating about 0.28 per unit of volatility. If you would invest  3,550  in Pressure Technologies Plc on October 10, 2024 and sell it today you would earn a total of  300.00  from holding Pressure Technologies Plc or generate 8.45% return on investment over 90 days.

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

Trellus Health plc  vs.  Pressure Technologies Plc

Trellus Health plc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Trellus Health plc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pressure Technologies Plc

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Pressure Technologies Plc are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Pressure Technologies unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Trellus Health and Pressure Technologies

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

The idea behind Trellus Health plc and Pressure Technologies Plc 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.