Correlation Between Cemtrex and Pagaya Technologies

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

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

Diversification Opportunities for Cemtrex and Pagaya Technologies

0.4

Correlation Coefficient

Cemtrex  Pagaya Technologies

Very weak diversification

The 3 months correlation between Cemtrex and Pagaya is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Cemtrex and Pagaya Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pagaya Technologies and Cemtrex 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 Cemtrex are associated (or correlated) with Pagaya Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pagaya Technologies has no effect on the direction of Cemtrex i.e., Cemtrex and Pagaya Technologies go up and down completely randomly.

Pair Corralation between Cemtrex and Pagaya Technologies

Given the investment horizon of 90 days Cemtrex is expected to under-perform the Pagaya Technologies. In addition to that, Cemtrex is 1.85 times more volatile than Pagaya Technologies. It trades about -0.26 of its total potential returns per unit of risk. Pagaya Technologies is currently generating about 0.0 per unit of volatility. If you would invest  1,608  in Pagaya Technologies on September 1, 2024 and sell it today you would lose (515.00) from holding Pagaya Technologies or give up 32.03% of portfolio value over 90 days.

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

Cemtrex  vs.  Pagaya Technologies

Cemtrex

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemtrex has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pagaya Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pagaya Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong technical and fundamental indicators, Pagaya Technologies is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Cemtrex and Pagaya Technologies

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

The idea behind Cemtrex and Pagaya Technologies 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.