Correlation Between PF Atlantic and LED IBond

Can any of the company-specific risk be diversified away by investing in both PF Atlantic and LED IBond 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 LED IBond 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 LED iBond International, you can compare the effects of market volatilities on PF Atlantic and LED IBond 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 LED IBond. Check out your portfolio center. Please also check ongoing floating volatility patterns of PF Atlantic and LED IBond.

Diversification Opportunities for PF Atlantic and LED IBond

-0.66

Correlation Coefficient

PF Atlantic  LED IBond

Excellent diversification

The 3 months correlation between ATLA-DKK and LED is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding PF Atlantic Petroleum and LED iBond International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LED iBond International 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 LED IBond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LED iBond International has no effect on the direction of PF Atlantic i.e., PF Atlantic and LED IBond go up and down completely randomly.

Pair Corralation between PF Atlantic and LED IBond

Assuming the 90 days trading horizon PF Atlantic Petroleum is expected to under-perform the LED IBond. But the stock apears to be less risky and, when comparing its historical volatility, PF Atlantic Petroleum is 5.18 times less risky than LED IBond. The stock trades about -0.16 of its potential returns per unit of risk. The LED iBond International is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  24.00  in LED iBond International on September 22, 2024 and sell it today you would earn a total of  5.00  from holding LED iBond International or generate 20.83% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.48%
Values	Daily Returns

PF Atlantic Petroleum  vs.  LED iBond International

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

LED iBond International

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in LED iBond International are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, LED IBond displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PF Atlantic and LED IBond

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

The idea behind PF Atlantic Petroleum and LED iBond International 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.

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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.