Correlation Between Power Financial and Pinetree Capital

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

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

Diversification Opportunities for Power Financial and Pinetree Capital

-0.92

Correlation Coefficient

Power Financial  Pinetree Capital

Pay attention - limited upside

The 3 months correlation between Power and Pinetree is -0.92. Overlapping area represents the amount of risk that can be diversified away by holding Power Financial Corp and Pinetree Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinetree Capital and Power Financial 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 Power Financial Corp are associated (or correlated) with Pinetree Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinetree Capital has no effect on the direction of Power Financial i.e., Power Financial and Pinetree Capital go up and down completely randomly.

Pair Corralation between Power Financial and Pinetree Capital

Assuming the 90 days trading horizon Power Financial Corp is expected to generate 0.09 times more return on investment than Pinetree Capital. However, Power Financial Corp is 10.78 times less risky than Pinetree Capital. It trades about 0.33 of its potential returns per unit of risk. Pinetree Capital is currently generating about -0.16 per unit of risk. If you would invest  2,365  in Power Financial Corp on May 28, 2025 and sell it today you would earn a total of  145.00  from holding Power Financial Corp or generate 6.13% return on investment over 90 days.

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

Power Financial Corp  vs.  Pinetree Capital

Power Financial Corp

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Power Financial Corp are ranked lower than 26 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Power Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pinetree Capital

Risk-Adjusted Performance

Weakest

Over the last 90 days Pinetree Capital has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in September 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Power Financial and Pinetree Capital

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

The idea behind Power Financial Corp and Pinetree Capital 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.