Correlation Between Superior Plus and PERENNIAL ENERGY

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Can any of the company-specific risk be diversified away by investing in both Superior Plus and PERENNIAL ENERGY 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 Superior Plus and PERENNIAL ENERGY into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Superior Plus Corp and PERENNIAL ENERGY HD 01, you can compare the effects of market volatilities on Superior Plus and PERENNIAL ENERGY 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 Superior Plus with a short position of PERENNIAL ENERGY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Superior Plus and PERENNIAL ENERGY.

Diversification Opportunities for Superior Plus and PERENNIAL ENERGY

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Superior and PERENNIAL is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Superior Plus Corp and PERENNIAL ENERGY HD 01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PERENNIAL ENERGY and Superior Plus 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 Superior Plus Corp are associated (or correlated) with PERENNIAL ENERGY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PERENNIAL ENERGY has no effect on the direction of Superior Plus i.e., Superior Plus and PERENNIAL ENERGY go up and down completely randomly.

Pair Corralation between Superior Plus and PERENNIAL ENERGY

Assuming the 90 days horizon Superior Plus Corp is expected to generate 0.89 times more return on investment than PERENNIAL ENERGY. However, Superior Plus Corp is 1.13 times less risky than PERENNIAL ENERGY. It trades about 0.0 of its potential returns per unit of risk. PERENNIAL ENERGY HD 01 is currently generating about -0.1 per unit of risk. If you would invest  447.00  in Superior Plus Corp on October 24, 2024 and sell it today you would lose (19.00) from holding Superior Plus Corp or give up 4.25% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy98.33%
ValuesDaily Returns

Superior Plus Corp  vs.  PERENNIAL ENERGY HD 01

 Performance 
       Timeline  
Superior Plus Corp 

Risk-Adjusted Performance

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

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days PERENNIAL ENERGY HD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Superior Plus and PERENNIAL ENERGY Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Superior Plus and PERENNIAL ENERGY

The main advantage of trading using opposite Superior Plus and PERENNIAL ENERGY positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Superior Plus position performs unexpectedly, PERENNIAL ENERGY 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 PERENNIAL ENERGY will offset losses from the drop in PERENNIAL ENERGY's long position.
The idea behind Superior Plus Corp and PERENNIAL ENERGY HD 01 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.

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