Correlation Between PERENNIAL ENERGY and CORONGLRES CDIS101

Can any of the company-specific risk be diversified away by investing in both PERENNIAL ENERGY and CORONGLRES CDIS101 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 PERENNIAL ENERGY and CORONGLRES CDIS101 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PERENNIAL ENERGY HD 01 and CORONGLRES CDIS101, you can compare the effects of market volatilities on PERENNIAL ENERGY and CORONGLRES CDIS101 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 PERENNIAL ENERGY with a short position of CORONGLRES CDIS101. Check out your portfolio center. Please also check ongoing floating volatility patterns of PERENNIAL ENERGY and CORONGLRES CDIS101.

Diversification Opportunities for PERENNIAL ENERGY and CORONGLRES CDIS101

0.11

Correlation Coefficient

PERENNIAL ENERGY  CORONGLRES CDIS101

Average diversification

The 3 months correlation between PERENNIAL and CORONGLRES is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding PERENNIAL ENERGY HD 01 and CORONGLRES CDIS101 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CORONGLRES CDIS101 and PERENNIAL 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 PERENNIAL ENERGY HD 01 are associated (or correlated) with CORONGLRES CDIS101. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CORONGLRES CDIS101 has no effect on the direction of PERENNIAL ENERGY i.e., PERENNIAL ENERGY and CORONGLRES CDIS101 go up and down completely randomly.

Pair Corralation between PERENNIAL ENERGY and CORONGLRES CDIS101

Assuming the 90 days horizon PERENNIAL ENERGY HD 01 is expected to under-perform the CORONGLRES CDIS101. But the stock apears to be less risky and, when comparing its historical volatility, PERENNIAL ENERGY HD 01 is 1.11 times less risky than CORONGLRES CDIS101. The stock trades about -0.38 of its potential returns per unit of risk. The CORONGLRES CDIS101 is currently generating about -0.22 of returns per unit of risk over similar time horizon. If you would invest  60.00  in CORONGLRES CDIS101 on September 23, 2024 and sell it today you would lose (12.00) from holding CORONGLRES CDIS101 or give up 20.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

PERENNIAL ENERGY HD 01  vs.  CORONGLRES CDIS101

PERENNIAL ENERGY

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PERENNIAL ENERGY HD 01 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

CORONGLRES CDIS101

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CORONGLRES CDIS101 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with PERENNIAL ENERGY and CORONGLRES CDIS101

The main advantage of trading using opposite PERENNIAL ENERGY and CORONGLRES CDIS101 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PERENNIAL ENERGY position performs unexpectedly, CORONGLRES CDIS101 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 CORONGLRES CDIS101 will offset losses from the drop in CORONGLRES CDIS101's long position.

The idea behind PERENNIAL ENERGY HD 01 and CORONGLRES CDIS101 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.