Correlation Between Photon Energy and Colt CZ

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

By analyzing existing cross correlation between Photon Energy NV and Colt CZ Group, you can compare the effects of market volatilities on Photon Energy and Colt CZ 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 Photon Energy with a short position of Colt CZ. Check out your portfolio center. Please also check ongoing floating volatility patterns of Photon Energy and Colt CZ.

Diversification Opportunities for Photon Energy and Colt CZ

-0.04

Correlation Coefficient

Photon Energy  Colt CZ

Good diversification

The 3 months correlation between Photon and Colt is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Photon Energy NV and Colt CZ Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colt CZ Group and Photon Energy 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 Photon Energy NV are associated (or correlated) with Colt CZ. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colt CZ Group has no effect on the direction of Photon Energy i.e., Photon Energy and Colt CZ go up and down completely randomly.

Pair Corralation between Photon Energy and Colt CZ

Assuming the 90 days trading horizon Photon Energy NV is expected to under-perform the Colt CZ. In addition to that, Photon Energy is 2.72 times more volatile than Colt CZ Group. It trades about -0.36 of its total potential returns per unit of risk. Colt CZ Group is currently generating about 0.09 per unit of volatility. If you would invest  63,400  in Colt CZ Group on September 13, 2024 and sell it today you would earn a total of  1,500  from holding Colt CZ Group or generate 2.37% return on investment over 90 days.

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

Photon Energy NV  vs.  Colt CZ Group

Photon Energy NV

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Photon Energy NV has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in January 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

Colt CZ Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Colt CZ Group has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable technical and fundamental indicators, Colt CZ is not utilizing all of its potentials. The latest stock price agitation, may contribute to short-term losses for the retail investors.

Pair Trading with Photon Energy and Colt CZ

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

The idea behind Photon Energy NV and Colt CZ Group 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.