Correlation Between Panoro Energy and Golden Ocean

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

By analyzing existing cross correlation between Panoro Energy ASA and Golden Ocean Group, you can compare the effects of market volatilities on Panoro Energy and Golden Ocean 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 Panoro Energy with a short position of Golden Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Panoro Energy and Golden Ocean.

Diversification Opportunities for Panoro Energy and Golden Ocean

0.4

Correlation Coefficient

Panoro Energy  Golden Ocean

Very weak diversification

The 3 months correlation between Panoro and Golden is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Panoro Energy ASA and Golden Ocean Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Ocean Group and Panoro 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 Panoro Energy ASA are associated (or correlated) with Golden Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Ocean Group has no effect on the direction of Panoro Energy i.e., Panoro Energy and Golden Ocean go up and down completely randomly.

Pair Corralation between Panoro Energy and Golden Ocean

Assuming the 90 days trading horizon Panoro Energy ASA is expected to generate 0.73 times more return on investment than Golden Ocean. However, Panoro Energy ASA is 1.37 times less risky than Golden Ocean. It trades about 0.13 of its potential returns per unit of risk. Golden Ocean Group is currently generating about -0.13 per unit of risk. If you would invest  2,647  in Panoro Energy ASA on September 5, 2024 and sell it today you would earn a total of  148.00  from holding Panoro Energy ASA or generate 5.59% return on investment over 90 days.

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

Panoro Energy ASA  vs.  Golden Ocean Group

Panoro Energy ASA

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Panoro Energy ASA are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting basic indicators, Panoro Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Golden Ocean Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Golden Ocean Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's essential indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Panoro Energy and Golden Ocean

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

The idea behind Panoro Energy ASA and Golden Ocean Group 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.