Correlation Between Summit Materials and Penta-Ocean Construction
Can any of the company-specific risk be diversified away by investing in both Summit Materials 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 Summit Materials 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 Summit Materials and Penta Ocean Construction Co, you can compare the effects of market volatilities on Summit Materials 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 Summit Materials with a short position of Penta-Ocean Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Summit Materials and Penta-Ocean Construction.
Diversification Opportunities for Summit Materials and Penta-Ocean Construction
-0.25 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Summit and Penta-Ocean is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Summit Materials 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 Summit Materials 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 Summit Materials 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 Summit Materials i.e., Summit Materials and Penta-Ocean Construction go up and down completely randomly.
Pair Corralation between Summit Materials and Penta-Ocean Construction
Assuming the 90 days trading horizon Summit Materials is expected to generate 0.75 times more return on investment than Penta-Ocean Construction. However, Summit Materials is 1.33 times less risky than Penta-Ocean Construction. It trades about 0.21 of its potential returns per unit of risk. Penta Ocean Construction Co is currently generating about 0.01 per unit of risk. If you would invest 4,780 in Summit Materials on October 10, 2024 and sell it today you would earn a total of 140.00 from holding Summit Materials or generate 2.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 94.44% |
Values | Daily Returns |
Summit Materials vs. Penta Ocean Construction Co
Performance |
Timeline |
Summit Materials |
Penta-Ocean Construction |
Summit Materials and Penta-Ocean Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Summit Materials and Penta-Ocean Construction
The main advantage of trading using opposite Summit Materials and Penta-Ocean Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Summit Materials 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.Summit Materials vs. Tianjin Capital Environmental | Summit Materials vs. Jacquet Metal Service | Summit Materials vs. ANGANG STEEL H | Summit Materials vs. De Grey Mining |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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