Correlation Between CEO Group and Pacific Petroleum

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

By analyzing existing cross correlation between CEO Group JSC and Pacific Petroleum Transportation, you can compare the effects of market volatilities on CEO Group and Pacific Petroleum 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 CEO Group with a short position of Pacific Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEO Group and Pacific Petroleum.

Diversification Opportunities for CEO Group and Pacific Petroleum

-0.74

Correlation Coefficient

CEO Group  Pacific Petroleum

Pay attention - limited upside

The 3 months correlation between CEO and Pacific is -0.74. Overlapping area represents the amount of risk that can be diversified away by holding CEO Group JSC and Pacific Petroleum Transportati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Petroleum and CEO 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 CEO Group JSC are associated (or correlated) with Pacific Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Petroleum has no effect on the direction of CEO Group i.e., CEO Group and Pacific Petroleum go up and down completely randomly.

Pair Corralation between CEO Group and Pacific Petroleum

Assuming the 90 days trading horizon CEO Group JSC is expected to under-perform the Pacific Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, CEO Group JSC is 1.78 times less risky than Pacific Petroleum. The stock trades about -0.51 of its potential returns per unit of risk. The Pacific Petroleum Transportation is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest  1,650,000  in Pacific Petroleum Transportation on October 6, 2024 and sell it today you would earn a total of  160,000  from holding Pacific Petroleum Transportation or generate 9.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CEO Group JSC  vs.  Pacific Petroleum Transportati

CEO Group JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEO Group JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pacific Petroleum

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Petroleum Transportation are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pacific Petroleum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEO Group and Pacific Petroleum

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

The idea behind CEO Group JSC and Pacific Petroleum Transportation 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..