Correlation Between Benguet Corp and PXP Energy

Can any of the company-specific risk be diversified away by investing in both Benguet Corp and PXP 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 Benguet Corp and PXP Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Benguet Corp A and PXP Energy Corp, you can compare the effects of market volatilities on Benguet Corp and PXP 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 Benguet Corp with a short position of PXP Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Benguet Corp and PXP Energy.

Diversification Opportunities for Benguet Corp and PXP Energy

-0.5

Correlation Coefficient

Benguet Corp  PXP Energy

Very good diversification

The 3 months correlation between Benguet and PXP is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Benguet Corp A and PXP Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PXP Energy Corp and Benguet Corp 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 Benguet Corp A are associated (or correlated) with PXP Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PXP Energy Corp has no effect on the direction of Benguet Corp i.e., Benguet Corp and PXP Energy go up and down completely randomly.

Pair Corralation between Benguet Corp and PXP Energy

Assuming the 90 days trading horizon Benguet Corp A is expected to under-perform the PXP Energy. But the stock apears to be less risky and, when comparing its historical volatility, Benguet Corp A is 1.47 times less risky than PXP Energy. The stock trades about -0.01 of its potential returns per unit of risk. The PXP Energy Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  383.00  in PXP Energy Corp on October 8, 2024 and sell it today you would lose (56.00) from holding PXP Energy Corp or give up 14.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.81%
Values	Daily Returns

Benguet Corp A  vs.  PXP Energy Corp

Benguet Corp A

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Benguet Corp A has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather unsteady basic indicators, Benguet Corp exhibited solid returns over the last few months and may actually be approaching a breakup point.

PXP Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PXP Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Benguet Corp and PXP Energy

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

The idea behind Benguet Corp A and PXP Energy Corp 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.