Correlation Between Panther Metals and Diversified Energy

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

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

Diversification Opportunities for Panther Metals and Diversified Energy

-0.12

Correlation Coefficient

Panther Metals  Diversified Energy

Good diversification

The 3 months correlation between Panther and Diversified is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Panther Metals PLC and Diversified Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Energy and Panther Metals 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 Panther Metals PLC are associated (or correlated) with Diversified Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Energy has no effect on the direction of Panther Metals i.e., Panther Metals and Diversified Energy go up and down completely randomly.

Pair Corralation between Panther Metals and Diversified Energy

Assuming the 90 days trading horizon Panther Metals PLC is expected to generate 1.74 times more return on investment than Diversified Energy. However, Panther Metals is 1.74 times more volatile than Diversified Energy. It trades about 0.07 of its potential returns per unit of risk. Diversified Energy is currently generating about 0.04 per unit of risk. If you would invest  12,125  in Panther Metals PLC on October 23, 2024 and sell it today you would lose (6,775) from holding Panther Metals PLC or give up 55.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.0%
Values	Daily Returns

Panther Metals PLC  vs.  Diversified Energy

Panther Metals PLC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Panther Metals PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain 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.

Diversified Energy

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Diversified Energy are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Diversified Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Panther Metals and Diversified Energy

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

The idea behind Panther Metals PLC and Diversified Energy 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.