Correlation Between PBF Energy and Idemitsu Kosan

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

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

Diversification Opportunities for PBF Energy and Idemitsu Kosan

0.6

Correlation Coefficient

PBF Energy  Idemitsu Kosan

Poor diversification

The 3 months correlation between PBF and Idemitsu is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding PBF Energy and Idemitsu Kosan Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan and PBF Energy 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 PBF Energy are associated (or correlated) with Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan has no effect on the direction of PBF Energy i.e., PBF Energy and Idemitsu Kosan go up and down completely randomly.

Pair Corralation between PBF Energy and Idemitsu Kosan

Considering the 90-day investment horizon PBF Energy is expected to under-perform the Idemitsu Kosan. But the stock apears to be less risky and, when comparing its historical volatility, PBF Energy is 1.09 times less risky than Idemitsu Kosan. The stock trades about -0.02 of its potential returns per unit of risk. The Idemitsu Kosan Co is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,205  in Idemitsu Kosan Co on October 10, 2024 and sell it today you would earn a total of  190.00  from holding Idemitsu Kosan Co or generate 15.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.91%
Values	Daily Returns

PBF Energy  vs.  Idemitsu Kosan Co

PBF Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PBF Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite conflicting performance in the last few months, the Stock's fundamental drivers remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Idemitsu Kosan

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PBF Energy and Idemitsu Kosan

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

The idea behind PBF Energy and Idemitsu Kosan Co 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.