Correlation Between BP Prudhoe and PTL

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

By analyzing existing cross correlation between BP Prudhoe Bay and PTL LTD Ordinary, you can compare the effects of market volatilities on BP Prudhoe and PTL 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 BP Prudhoe with a short position of PTL. Check out your portfolio center. Please also check ongoing floating volatility patterns of BP Prudhoe and PTL.

Diversification Opportunities for BP Prudhoe and PTL

-0.44

Correlation Coefficient

BP Prudhoe  PTL

Very good diversification

The 3 months correlation between BPT and PTL is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding BP Prudhoe Bay and PTL LTD Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTL LTD Ordinary and BP Prudhoe 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 BP Prudhoe Bay are associated (or correlated) with PTL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTL LTD Ordinary has no effect on the direction of BP Prudhoe i.e., BP Prudhoe and PTL go up and down completely randomly.

Pair Corralation between BP Prudhoe and PTL

Considering the 90-day investment horizon BP Prudhoe Bay is expected to under-perform the PTL. But the stock apears to be less risky and, when comparing its historical volatility, BP Prudhoe Bay is 2.28 times less risky than PTL. The stock trades about -0.1 of its potential returns per unit of risk. The PTL LTD Ordinary is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  407.00  in PTL LTD Ordinary on October 11, 2024 and sell it today you would earn a total of  798.50  from holding PTL LTD Ordinary or generate 196.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	11.92%
Values	Daily Returns

BP Prudhoe Bay  vs.  PTL LTD Ordinary

BP Prudhoe Bay

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BP Prudhoe Bay has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

PTL LTD Ordinary

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in PTL LTD Ordinary are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, PTL exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BP Prudhoe and PTL

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

The idea behind BP Prudhoe Bay and PTL LTD Ordinary 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.