Correlation Between Penta Ocean and BANK HANDLOWY

Can any of the company-specific risk be diversified away by investing in both Penta Ocean and BANK HANDLOWY 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 BANK HANDLOWY 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 BANK HANDLOWY, you can compare the effects of market volatilities on Penta Ocean and BANK HANDLOWY 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 BANK HANDLOWY. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and BANK HANDLOWY.

Diversification Opportunities for Penta Ocean and BANK HANDLOWY

0.25

Correlation Coefficient

Penta Ocean  BANK HANDLOWY

Modest diversification

The 3 months correlation between Penta and BANK is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and BANK HANDLOWY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BANK HANDLOWY 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 BANK HANDLOWY. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BANK HANDLOWY has no effect on the direction of Penta Ocean i.e., Penta Ocean and BANK HANDLOWY go up and down completely randomly.

Pair Corralation between Penta Ocean and BANK HANDLOWY

Assuming the 90 days horizon Penta Ocean is expected to generate 1.12 times less return on investment than BANK HANDLOWY. In addition to that, Penta Ocean is 1.81 times more volatile than BANK HANDLOWY. It trades about 0.09 of its total potential returns per unit of risk. BANK HANDLOWY is currently generating about 0.18 per unit of volatility. If you would invest  2,030  in BANK HANDLOWY on September 22, 2024 and sell it today you would earn a total of  65.00  from holding BANK HANDLOWY or generate 3.2% 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.  BANK HANDLOWY

Penta Ocean Construc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Penta Ocean is not utilizing all of its potentials. The newest stock price disturbance, may contribute to mid-run losses for the stockholders.

BANK HANDLOWY

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Penta Ocean and BANK HANDLOWY

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

The idea behind Penta Ocean Construction Co and BANK HANDLOWY 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.