Correlation Between Protek Capital and On4 Communications

Can any of the company-specific risk be diversified away by investing in both Protek Capital and On4 Communications 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 Protek Capital and On4 Communications into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Protek Capital and On4 Communications, you can compare the effects of market volatilities on Protek Capital and On4 Communications 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 Protek Capital with a short position of On4 Communications. Check out your portfolio center. Please also check ongoing floating volatility patterns of Protek Capital and On4 Communications.

Diversification Opportunities for Protek Capital and On4 Communications

0.02

Correlation Coefficient

Protek Capital  On4 Communications

Significant diversification

The 3 months correlation between Protek and On4 is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Protek Capital and On4 Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on On4 Communications and Protek Capital 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 Protek Capital are associated (or correlated) with On4 Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of On4 Communications has no effect on the direction of Protek Capital i.e., Protek Capital and On4 Communications go up and down completely randomly.

Pair Corralation between Protek Capital and On4 Communications

If you would invest  0.01  in On4 Communications on February 19, 2024 and sell it today you would earn a total of  0.00  from holding On4 Communications or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.44%
Values	Daily Returns

Protek Capital  vs.  On4 Communications

Protek Capital

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Protek Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Protek Capital is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

On4 Communications

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in On4 Communications are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent fundamental indicators, On4 Communications demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Protek Capital and On4 Communications

The main advantage of trading using opposite Protek Capital and On4 Communications positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Protek Capital position performs unexpectedly, On4 Communications 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 On4 Communications will offset losses from the drop in On4 Communications' long position.

The idea behind Protek Capital and On4 Communications 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.