Correlation Between Penneo AS and Cemat AS

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Can any of the company-specific risk be diversified away by investing in both Penneo AS and Cemat AS 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 Penneo AS and Cemat AS into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Penneo AS and Cemat AS, you can compare the effects of market volatilities on Penneo AS and Cemat AS 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 Penneo AS with a short position of Cemat AS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penneo AS and Cemat AS.

Diversification Opportunities for Penneo AS and Cemat AS

-0.61
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Penneo and Cemat is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Penneo AS and Cemat AS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cemat AS and Penneo AS 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 Penneo AS are associated (or correlated) with Cemat AS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cemat AS has no effect on the direction of Penneo AS i.e., Penneo AS and Cemat AS go up and down completely randomly.

Pair Corralation between Penneo AS and Cemat AS

Assuming the 90 days trading horizon Penneo AS is expected to generate 12.21 times more return on investment than Cemat AS. However, Penneo AS is 12.21 times more volatile than Cemat AS. It trades about 0.14 of its potential returns per unit of risk. Cemat AS is currently generating about -0.08 per unit of risk. If you would invest  826.00  in Penneo AS on September 23, 2024 and sell it today you would earn a total of  749.00  from holding Penneo AS or generate 90.68% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Penneo AS  vs.  Cemat AS

 Performance 
       Timeline  
Penneo AS 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Penneo AS are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Penneo AS sustained solid returns over the last few months and may actually be approaching a breakup point.
Cemat AS 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Cemat AS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Cemat AS is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Penneo AS and Cemat AS Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Penneo AS and Cemat AS

The main advantage of trading using opposite Penneo AS and Cemat AS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penneo AS position performs unexpectedly, Cemat AS 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 Cemat AS will offset losses from the drop in Cemat AS's long position.
The idea behind Penneo AS and Cemat AS 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.

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