Correlation Between PTC India and Action Construction

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

By analyzing existing cross correlation between PTC India Financial and Action Construction Equipment, you can compare the effects of market volatilities on PTC India and Action Construction 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 India with a short position of Action Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of PTC India and Action Construction.

Diversification Opportunities for PTC India and Action Construction

-0.18

Correlation Coefficient

PTC India  Action Construction

Good diversification

The 3 months correlation between PTC and Action is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding PTC India Financial and Action Construction Equipment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Action Construction and PTC India 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 India Financial are associated (or correlated) with Action Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Action Construction has no effect on the direction of PTC India i.e., PTC India and Action Construction go up and down completely randomly.

Pair Corralation between PTC India and Action Construction

Assuming the 90 days trading horizon PTC India Financial is expected to generate 1.28 times more return on investment than Action Construction. However, PTC India is 1.28 times more volatile than Action Construction Equipment. It trades about 0.14 of its potential returns per unit of risk. Action Construction Equipment is currently generating about -0.06 per unit of risk. If you would invest  3,417  in PTC India Financial on April 24, 2025 and sell it today you would earn a total of  683.00  from holding PTC India Financial or generate 19.99% return on investment over 90 days.

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

PTC India Financial  vs.  Action Construction Equipment

PTC India Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PTC India Financial are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating technical and fundamental indicators, PTC India exhibited solid returns over the last few months and may actually be approaching a breakup point.

Action Construction

Risk-Adjusted Performance

Very Weak

Over the last 90 days Action Construction Equipment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest fragile performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with PTC India and Action Construction

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

The idea behind PTC India Financial and Action Construction Equipment 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.