Correlation Between P10 and Foreign Trade

Can any of the company-specific risk be diversified away by investing in both P10 and Foreign Trade 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 P10 and Foreign Trade into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between P10 Inc and Foreign Trade Bank, you can compare the effects of market volatilities on P10 and Foreign Trade 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 P10 with a short position of Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of P10 and Foreign Trade.

Diversification Opportunities for P10 and Foreign Trade

-0.79

Correlation Coefficient

P10  Foreign Trade

Pay attention - limited upside

The 3 months correlation between P10 and Foreign is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding P10 Inc and Foreign Trade Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade Bank and P10 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 P10 Inc are associated (or correlated) with Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Bank has no effect on the direction of P10 i.e., P10 and Foreign Trade go up and down completely randomly.

Pair Corralation between P10 and Foreign Trade

Allowing for the 90-day total investment horizon P10 Inc is expected to under-perform the Foreign Trade. In addition to that, P10 is 1.26 times more volatile than Foreign Trade Bank. It trades about -0.02 of its total potential returns per unit of risk. Foreign Trade Bank is currently generating about 0.11 per unit of volatility. If you would invest  1,236  in Foreign Trade Bank on February 4, 2024 and sell it today you would earn a total of  1,803  from holding Foreign Trade Bank or generate 145.87% return on investment over 90 days.

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

P10 Inc  vs.  Foreign Trade Bank

P10 Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days P10 Inc 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 fairly strong which may send shares a bit higher in June 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Foreign Trade Bank

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Foreign Trade Bank are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady essential indicators, Foreign Trade showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with P10 and Foreign Trade

The main advantage of trading using opposite P10 and Foreign Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if P10 position performs unexpectedly, Foreign Trade 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 Foreign Trade will offset losses from the drop in Foreign Trade's long position.

The idea behind P10 Inc and Foreign Trade 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.

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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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.