Correlation Between Public Power and General Commercial

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

By analyzing existing cross correlation between Public Power and General Commercial Industrial, you can compare the effects of market volatilities on Public Power and General Commercial 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 Public Power with a short position of General Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Public Power and General Commercial.

Diversification Opportunities for Public Power and General Commercial

0.71

Correlation Coefficient

Public Power  General Commercial

Poor diversification

The 3 months correlation between Public and General is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Public Power and General Commercial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Commercial and Public Power 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 Public Power are associated (or correlated) with General Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Commercial has no effect on the direction of Public Power i.e., Public Power and General Commercial go up and down completely randomly.

Pair Corralation between Public Power and General Commercial

Assuming the 90 days trading horizon Public Power is expected to generate 2.58 times less return on investment than General Commercial. But when comparing it to its historical volatility, Public Power is 1.54 times less risky than General Commercial. It trades about 0.12 of its potential returns per unit of risk. General Commercial Industrial is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  136.00  in General Commercial Industrial on April 23, 2025 and sell it today you would earn a total of  34.00  from holding General Commercial Industrial or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.41%
Values	Daily Returns

Public Power  vs.  General Commercial Industrial

Public Power

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Public Power are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively weak fundamental indicators, Public Power may actually be approaching a critical reversion point that can send shares even higher in August 2025.

General Commercial

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in General Commercial Industrial are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, General Commercial sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Public Power and General Commercial

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

The idea behind Public Power and General Commercial Industrial 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.