Correlation Between Carabao Group and PTG Energy

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

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

Diversification Opportunities for Carabao Group and PTG Energy

-0.03

Correlation Coefficient

Carabao Group  PTG Energy

Good diversification

The 3 months correlation between Carabao and PTG is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Carabao Group Public and PTG Energy Public in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PTG Energy Public and Carabao Group 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 Carabao Group Public are associated (or correlated) with PTG Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PTG Energy Public has no effect on the direction of Carabao Group i.e., Carabao Group and PTG Energy go up and down completely randomly.

Pair Corralation between Carabao Group and PTG Energy

Assuming the 90 days trading horizon Carabao Group Public is expected to generate 0.34 times more return on investment than PTG Energy. However, Carabao Group Public is 2.92 times less risky than PTG Energy. It trades about -0.23 of its potential returns per unit of risk. PTG Energy Public is currently generating about -0.23 per unit of risk. If you would invest  8,025  in Carabao Group Public on October 12, 2024 and sell it today you would lose (575.00) from holding Carabao Group Public or give up 7.17% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Carabao Group Public  vs.  PTG Energy Public

Carabao Group Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Carabao Group Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent technical and fundamental indicators, Carabao Group is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

PTG Energy Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in PTG Energy Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak fundamental drivers, PTG Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Carabao Group and PTG Energy

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

The idea behind Carabao Group Public and PTG Energy Public 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..