Correlation Between Penta Ocean and ADRIATIC METALS

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

By analyzing existing cross correlation between Penta Ocean Construction Co and ADRIATIC METALS LS 013355, you can compare the effects of market volatilities on Penta Ocean and ADRIATIC METALS 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 Penta Ocean with a short position of ADRIATIC METALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and ADRIATIC METALS.

Diversification Opportunities for Penta Ocean and ADRIATIC METALS

0.39

Correlation Coefficient

Penta Ocean  ADRIATIC METALS

Weak diversification

The 3 months correlation between Penta and ADRIATIC is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and ADRIATIC METALS LS 013355 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ADRIATIC METALS LS and Penta Ocean 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 Penta Ocean Construction Co are associated (or correlated) with ADRIATIC METALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ADRIATIC METALS LS has no effect on the direction of Penta Ocean i.e., Penta Ocean and ADRIATIC METALS go up and down completely randomly.

Pair Corralation between Penta Ocean and ADRIATIC METALS

Assuming the 90 days horizon Penta Ocean is expected to generate 1.12 times less return on investment than ADRIATIC METALS. But when comparing it to its historical volatility, Penta Ocean Construction Co is 2.22 times less risky than ADRIATIC METALS. It trades about 0.11 of its potential returns per unit of risk. ADRIATIC METALS LS 013355 is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  230.00  in ADRIATIC METALS LS 013355 on December 22, 2024 and sell it today you would earn a total of  22.00  from holding ADRIATIC METALS LS 013355 or generate 9.57% return on investment over 90 days.

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

Penta Ocean Construction Co  vs.  ADRIATIC METALS LS 013355

Penta Ocean Construc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Penta Ocean reported solid returns over the last few months and may actually be approaching a breakup point.

ADRIATIC METALS LS

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in ADRIATIC METALS LS 013355 are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ADRIATIC METALS reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penta Ocean and ADRIATIC METALS

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

The idea behind Penta Ocean Construction Co and ADRIATIC METALS LS 013355 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.