Correlation Between Baker Hughes and Panther Metals

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

By analyzing existing cross correlation between Baker Hughes Co and Panther Metals PLC, you can compare the effects of market volatilities on Baker Hughes and Panther Metals 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 Baker Hughes with a short position of Panther Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Baker Hughes and Panther Metals.

Diversification Opportunities for Baker Hughes and Panther Metals

0.7

Correlation Coefficient

Baker Hughes  Panther Metals

Poor diversification

The 3 months correlation between Baker and Panther is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Baker Hughes Co and Panther Metals PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Panther Metals PLC and Baker Hughes 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 Baker Hughes Co are associated (or correlated) with Panther Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Panther Metals PLC has no effect on the direction of Baker Hughes i.e., Baker Hughes and Panther Metals go up and down completely randomly.

Pair Corralation between Baker Hughes and Panther Metals

Assuming the 90 days trading horizon Baker Hughes is expected to generate 67.6 times less return on investment than Panther Metals. But when comparing it to its historical volatility, Baker Hughes Co is 43.16 times less risky than Panther Metals. It trades about 0.04 of its potential returns per unit of risk. Panther Metals PLC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  12,250  in Panther Metals PLC on October 4, 2024 and sell it today you would lose (3,750) from holding Panther Metals PLC or give up 30.61% of portfolio value over 90 days.

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

Baker Hughes Co  vs.  Panther Metals PLC

Baker Hughes

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Baker Hughes Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Baker Hughes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Panther Metals PLC

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Panther Metals PLC are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Panther Metals unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Baker Hughes and Panther Metals

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

The idea behind Baker Hughes Co and Panther Metals PLC 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.