Correlation Between Dufu Tech and PMB Technology

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

By analyzing existing cross correlation between Dufu Tech Corp and PMB Technology Bhd, you can compare the effects of market volatilities on Dufu Tech and PMB Technology 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 Dufu Tech with a short position of PMB Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dufu Tech and PMB Technology.

Diversification Opportunities for Dufu Tech and PMB Technology

0.23

Correlation Coefficient

Dufu Tech  PMB Technology

Modest diversification

The 3 months correlation between Dufu and PMB is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dufu Tech Corp and PMB Technology Bhd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PMB Technology Bhd and Dufu Tech 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 Dufu Tech Corp are associated (or correlated) with PMB Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PMB Technology Bhd has no effect on the direction of Dufu Tech i.e., Dufu Tech and PMB Technology go up and down completely randomly.

Pair Corralation between Dufu Tech and PMB Technology

Assuming the 90 days trading horizon Dufu Tech Corp is expected to generate 1.0 times more return on investment than PMB Technology. However, Dufu Tech is 1.0 times more volatile than PMB Technology Bhd. It trades about 0.03 of its potential returns per unit of risk. PMB Technology Bhd is currently generating about -0.06 per unit of risk. If you would invest  163.00  in Dufu Tech Corp on September 28, 2024 and sell it today you would earn a total of  29.00  from holding Dufu Tech Corp or generate 17.79% return on investment over 90 days.

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

Dufu Tech Corp  vs.  PMB Technology Bhd

Dufu Tech Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Dufu Tech Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Dufu Tech may actually be approaching a critical reversion point that can send shares even higher in January 2025.

PMB Technology Bhd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PMB Technology Bhd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Dufu Tech and PMB Technology

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

The idea behind Dufu Tech Corp and PMB Technology Bhd 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.