Correlation Between Marine Products and PACIFIC

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

By analyzing existing cross correlation between Marine Products and PACIFIC GAS ELECTRIC, you can compare the effects of market volatilities on Marine Products and PACIFIC 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 Marine Products with a short position of PACIFIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Marine Products and PACIFIC.

Diversification Opportunities for Marine Products and PACIFIC

0.05

Correlation Coefficient

Marine Products  PACIFIC

Significant diversification

The 3 months correlation between Marine and PACIFIC is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Marine Products and PACIFIC GAS ELECTRIC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS ELECTRIC and Marine Products 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 Marine Products are associated (or correlated) with PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS ELECTRIC has no effect on the direction of Marine Products i.e., Marine Products and PACIFIC go up and down completely randomly.

Pair Corralation between Marine Products and PACIFIC

Considering the 90-day investment horizon Marine Products is expected to under-perform the PACIFIC. In addition to that, Marine Products is 7.93 times more volatile than PACIFIC GAS ELECTRIC. It trades about -0.04 of its total potential returns per unit of risk. PACIFIC GAS ELECTRIC is currently generating about 0.02 per unit of volatility. If you would invest  9,813  in PACIFIC GAS ELECTRIC on September 26, 2024 and sell it today you would earn a total of  20.00  from holding PACIFIC GAS ELECTRIC or generate 0.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Marine Products  vs.  PACIFIC GAS ELECTRIC

Marine Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Marine Products is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

PACIFIC GAS ELECTRIC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PACIFIC GAS ELECTRIC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, PACIFIC is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Marine Products and PACIFIC

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

The idea behind Marine Products and PACIFIC GAS ELECTRIC 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.