Correlation Between Power Solution and Project Planning

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

By analyzing existing cross correlation between Power Solution Technologies and Project Planning Service, you can compare the effects of market volatilities on Power Solution and Project Planning 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 Power Solution with a short position of Project Planning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Power Solution and Project Planning.

Diversification Opportunities for Power Solution and Project Planning

-0.44

Correlation Coefficient

Power Solution  Project Planning

Very good diversification

The 3 months correlation between Power and Project is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Power Solution Technologies and Project Planning Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Project Planning Service and Power Solution 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 Power Solution Technologies are associated (or correlated) with Project Planning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Project Planning Service has no effect on the direction of Power Solution i.e., Power Solution and Project Planning go up and down completely randomly.

Pair Corralation between Power Solution and Project Planning

Assuming the 90 days trading horizon Power Solution is expected to generate 16.98 times less return on investment than Project Planning. But when comparing it to its historical volatility, Power Solution Technologies is 1.57 times less risky than Project Planning. It trades about 0.02 of its potential returns per unit of risk. Project Planning Service is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  16.00  in Project Planning Service on April 22, 2025 and sell it today you would earn a total of  10.00  from holding Project Planning Service or generate 62.5% return on investment over 90 days.

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

Power Solution Technologies  vs.  Project Planning Service

Power Solution Techn

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Power Solution Technologies are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Power Solution is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Project Planning Service

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Project Planning Service are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Project Planning disclosed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Power Solution and Project Planning

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

The idea behind Power Solution Technologies and Project Planning Service 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.