Correlation Between President Bakery and PTG Energy

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

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

Diversification Opportunities for President Bakery and PTG Energy

-0.06

Correlation Coefficient

President Bakery  PTG Energy

Good diversification

The 3 months correlation between President and PTG is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding President Bakery 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 President Bakery 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 President Bakery 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 President Bakery i.e., President Bakery and PTG Energy go up and down completely randomly.

Pair Corralation between President Bakery and PTG Energy

Assuming the 90 days horizon President Bakery Public is expected to under-perform the PTG Energy. But the stock apears to be less risky and, when comparing its historical volatility, President Bakery Public is 94.42 times less risky than PTG Energy. The stock trades about -0.04 of its potential returns per unit of risk. The PTG Energy Public is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,465  in PTG Energy Public on October 12, 2024 and sell it today you would lose (630.00) from holding PTG Energy Public or give up 43.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.58%
Values	Daily Returns

President Bakery Public  vs.  PTG Energy Public

President Bakery Public

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days President Bakery Public has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent fundamental drivers, President Bakery is not utilizing all of its potentials. The latest 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 conflicting fundamental drivers, PTG Energy sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with President Bakery and PTG Energy

The main advantage of trading using opposite President Bakery and PTG Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if President Bakery 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 President Bakery 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.