Correlation Between Pollard Banknote and Dexterra

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

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

Diversification Opportunities for Pollard Banknote and Dexterra

0.8

Correlation Coefficient

Pollard Banknote  Dexterra

Very poor diversification

The 3 months correlation between Pollard and Dexterra is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Pollard Banknote Limited and Dexterra Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dexterra Group and Pollard Banknote 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 Pollard Banknote Limited are associated (or correlated) with Dexterra. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dexterra Group has no effect on the direction of Pollard Banknote i.e., Pollard Banknote and Dexterra go up and down completely randomly.

Pair Corralation between Pollard Banknote and Dexterra

Assuming the 90 days trading horizon Pollard Banknote is expected to generate 1.02 times less return on investment than Dexterra. In addition to that, Pollard Banknote is 1.63 times more volatile than Dexterra Group. It trades about 0.15 of its total potential returns per unit of risk. Dexterra Group is currently generating about 0.26 per unit of volatility. If you would invest  772.00  in Dexterra Group on April 21, 2025 and sell it today you would earn a total of  174.00  from holding Dexterra Group or generate 22.54% return on investment over 90 days.

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

Pollard Banknote Limited  vs.  Dexterra Group

Pollard Banknote

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pollard Banknote Limited are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very fragile essential indicators, Pollard Banknote displayed solid returns over the last few months and may actually be approaching a breakup point.

Dexterra Group

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Dexterra Group are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Dexterra displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pollard Banknote and Dexterra

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

The idea behind Pollard Banknote Limited and Dexterra 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.

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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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.