Correlation Between PTC and First Resource

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

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

Diversification Opportunities for PTC and First Resource

0.91

Correlation Coefficient

PTC  First Resource

Almost no diversification

The 3 months correlation between PTC and First is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding PTC Inc and First Resource Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Resource Bank and PTC 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 PTC Inc are associated (or correlated) with First Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Resource Bank has no effect on the direction of PTC i.e., PTC and First Resource go up and down completely randomly.

Pair Corralation between PTC and First Resource

Considering the 90-day investment horizon PTC Inc is expected to generate 1.98 times more return on investment than First Resource. However, PTC is 1.98 times more volatile than First Resource Bank. It trades about 0.15 of its potential returns per unit of risk. First Resource Bank is currently generating about 0.2 per unit of risk. If you would invest  16,009  in PTC Inc on May 2, 2025 and sell it today you would earn a total of  4,242  from holding PTC Inc or generate 26.5% return on investment over 90 days.

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

PTC Inc  vs.  First Resource Bank

PTC Inc

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PTC Inc are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent basic indicators, PTC exhibited solid returns over the last few months and may actually be approaching a breakup point.

First Resource Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in First Resource Bank are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, First Resource sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PTC and First Resource

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

The idea behind PTC Inc and First Resource Bank 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.

Check out your portfolio center.

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.