Correlation Between Powercell Sweden and JonDeTech Sensors

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

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

Diversification Opportunities for Powercell Sweden and JonDeTech Sensors

0.87

Correlation Coefficient

Powercell Sweden  JonDeTech Sensors

Very poor diversification

The 3 months correlation between Powercell and JonDeTech is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Powercell Sweden and JonDeTech Sensors in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JonDeTech Sensors and Powercell Sweden 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 Powercell Sweden are associated (or correlated) with JonDeTech Sensors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JonDeTech Sensors has no effect on the direction of Powercell Sweden i.e., Powercell Sweden and JonDeTech Sensors go up and down completely randomly.

Pair Corralation between Powercell Sweden and JonDeTech Sensors

Assuming the 90 days trading horizon Powercell Sweden is expected to under-perform the JonDeTech Sensors. But the stock apears to be less risky and, when comparing its historical volatility, Powercell Sweden is 2.77 times less risky than JonDeTech Sensors. The stock trades about -0.11 of its potential returns per unit of risk. The JonDeTech Sensors is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  5.62  in JonDeTech Sensors on February 1, 2024 and sell it today you would lose (3.38) from holding JonDeTech Sensors or give up 60.14% of portfolio value over 90 days.

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

Powercell Sweden  vs.  JonDeTech Sensors

Powercell Sweden

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Powercell Sweden 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 essential indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

JonDeTech Sensors

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days JonDeTech Sensors 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 June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Powercell Sweden and JonDeTech Sensors

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

The idea behind Powercell Sweden and JonDeTech Sensors 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.