Correlation Between PICKN PAY and Japan Petroleum

Can any of the company-specific risk be diversified away by investing in both PICKN PAY and Japan Petroleum 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 PICKN PAY and Japan Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PICKN PAY STORES and Japan Petroleum Exploration, you can compare the effects of market volatilities on PICKN PAY and Japan Petroleum 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 PICKN PAY with a short position of Japan Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of PICKN PAY and Japan Petroleum.

Diversification Opportunities for PICKN PAY and Japan Petroleum

0.04

Correlation Coefficient

PICKN PAY  Japan Petroleum

Significant diversification

The 3 months correlation between PICKN and Japan is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding PICKN PAY STORES and Japan Petroleum Exploration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Petroleum Expl and PICKN PAY 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 PICKN PAY STORES are associated (or correlated) with Japan Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Petroleum Expl has no effect on the direction of PICKN PAY i.e., PICKN PAY and Japan Petroleum go up and down completely randomly.

Pair Corralation between PICKN PAY and Japan Petroleum

Assuming the 90 days trading horizon PICKN PAY STORES is expected to generate 1.64 times more return on investment than Japan Petroleum. However, PICKN PAY is 1.64 times more volatile than Japan Petroleum Exploration. It trades about 0.02 of its potential returns per unit of risk. Japan Petroleum Exploration is currently generating about 0.02 per unit of risk. If you would invest  157.00  in PICKN PAY STORES on October 5, 2024 and sell it today you would lose (3.00) from holding PICKN PAY STORES or give up 1.91% of portfolio value over 90 days.

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

PICKN PAY STORES  vs.  Japan Petroleum Exploration

PICKN PAY STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PICKN PAY STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PICKN PAY is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Japan Petroleum Expl

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Japan Petroleum Exploration has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Japan Petroleum is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PICKN PAY and Japan Petroleum

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

The idea behind PICKN PAY STORES and Japan Petroleum Exploration 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.