Correlation Between GRUPO CARSO-A1 and Penta-Ocean Construction

Can any of the company-specific risk be diversified away by investing in both GRUPO CARSO-A1 and Penta-Ocean 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 GRUPO CARSO-A1 and Penta-Ocean Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between GRUPO CARSO A1 and Penta Ocean Construction Co, you can compare the effects of market volatilities on GRUPO CARSO-A1 and Penta-Ocean 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 GRUPO CARSO-A1 with a short position of Penta-Ocean Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of GRUPO CARSO-A1 and Penta-Ocean Construction.

Diversification Opportunities for GRUPO CARSO-A1 and Penta-Ocean Construction

0.13

Correlation Coefficient

GRUPO CARSO-A1  Penta-Ocean Construction

Average diversification

The 3 months correlation between GRUPO and Penta-Ocean is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding GRUPO CARSO A1 and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta-Ocean Construction and GRUPO CARSO-A1 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 GRUPO CARSO A1 are associated (or correlated) with Penta-Ocean Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta-Ocean Construction has no effect on the direction of GRUPO CARSO-A1 i.e., GRUPO CARSO-A1 and Penta-Ocean Construction go up and down completely randomly.

Pair Corralation between GRUPO CARSO-A1 and Penta-Ocean Construction

Assuming the 90 days trading horizon GRUPO CARSO A1 is expected to generate 2.46 times more return on investment than Penta-Ocean Construction. However, GRUPO CARSO-A1 is 2.46 times more volatile than Penta Ocean Construction Co. It trades about 0.05 of its potential returns per unit of risk. Penta Ocean Construction Co is currently generating about -0.03 per unit of risk. If you would invest  525.00  in GRUPO CARSO A1 on September 4, 2024 and sell it today you would earn a total of  40.00  from holding GRUPO CARSO A1 or generate 7.62% return on investment over 90 days.

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

GRUPO CARSO A1  vs.  Penta Ocean Construction Co

GRUPO CARSO A1

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in GRUPO CARSO A1 are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, GRUPO CARSO-A1 may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Penta-Ocean Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Penta Ocean Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Penta-Ocean Construction is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with GRUPO CARSO-A1 and Penta-Ocean Construction

The main advantage of trading using opposite GRUPO CARSO-A1 and Penta-Ocean Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GRUPO CARSO-A1 position performs unexpectedly, Penta-Ocean 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 Penta-Ocean Construction will offset losses from the drop in Penta-Ocean Construction's long position.

The idea behind GRUPO CARSO A1 and Penta Ocean Construction Co 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.