Correlation Between Pentagon I and Totally Hip

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

By analyzing existing cross correlation between Pentagon I Capital and Totally Hip Technologies, you can compare the effects of market volatilities on Pentagon I and Totally Hip 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 Pentagon I with a short position of Totally Hip. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pentagon I and Totally Hip.

Diversification Opportunities for Pentagon I and Totally Hip

-1.0

Correlation Coefficient

Pentagon I  Totally Hip

Pay attention - limited upside

The 3 months correlation between Pentagon and Totally is -1.0. Overlapping area represents the amount of risk that can be diversified away by holding Pentagon I Capital and Totally Hip Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Totally Hip Technologies and Pentagon I 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 Pentagon I Capital are associated (or correlated) with Totally Hip. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Totally Hip Technologies has no effect on the direction of Pentagon I i.e., Pentagon I and Totally Hip go up and down completely randomly.

Pair Corralation between Pentagon I and Totally Hip

Assuming the 90 days trading horizon Pentagon I Capital is expected to generate 2.83 times more return on investment than Totally Hip. However, Pentagon I is 2.83 times more volatile than Totally Hip Technologies. It trades about 0.0 of its potential returns per unit of risk. Totally Hip Technologies is currently generating about -0.05 per unit of risk. If you would invest  11.00  in Pentagon I Capital on April 25, 2025 and sell it today you would lose (7.50) from holding Pentagon I Capital or give up 68.18% of portfolio value over 90 days.

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

Pentagon I Capital  vs.  Totally Hip Technologies

Pentagon I Capital

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pentagon I Capital has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Pentagon I is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Totally Hip Technologies

Risk-Adjusted Performance

Very Weak

Over the last 90 days Totally Hip Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable basic indicators, Totally Hip is not utilizing all of its potentials. The latest stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Pentagon I and Totally Hip

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

The idea behind Pentagon I Capital and Totally Hip Technologies 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.