Correlation Between PF Atlantic and Cemat AS

Can any of the company-specific risk be diversified away by investing in both PF Atlantic and Cemat AS 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 PF Atlantic and Cemat AS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PF Atlantic Petroleum and Cemat AS, you can compare the effects of market volatilities on PF Atlantic and Cemat AS 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 PF Atlantic with a short position of Cemat AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of PF Atlantic and Cemat AS.

Diversification Opportunities for PF Atlantic and Cemat AS

0.78

Correlation Coefficient

PF Atlantic  Cemat AS

Poor diversification

The 3 months correlation between ATLA-DKK and Cemat is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding PF Atlantic Petroleum and Cemat AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemat AS and PF Atlantic 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 PF Atlantic Petroleum are associated (or correlated) with Cemat AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemat AS has no effect on the direction of PF Atlantic i.e., PF Atlantic and Cemat AS go up and down completely randomly.

Pair Corralation between PF Atlantic and Cemat AS

Assuming the 90 days trading horizon PF Atlantic Petroleum is expected to under-perform the Cemat AS. In addition to that, PF Atlantic is 2.17 times more volatile than Cemat AS. It trades about -0.04 of its total potential returns per unit of risk. Cemat AS is currently generating about 0.04 per unit of volatility. If you would invest  83.00  in Cemat AS on October 4, 2024 and sell it today you would earn a total of  20.00  from holding Cemat AS or generate 24.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.7%
Values	Daily Returns

PF Atlantic Petroleum  vs.  Cemat AS

PF Atlantic Petroleum

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PF Atlantic Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Cemat AS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cemat AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Pair Trading with PF Atlantic and Cemat AS

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

The idea behind PF Atlantic Petroleum and Cemat AS 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.