Correlation Between Penta-Ocean Construction and AIR PRODCHEMICALS

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

Diversification Opportunities for Penta-Ocean Construction and AIR PRODCHEMICALS

-0.37

Correlation Coefficient

Penta-Ocean Construction  AIR PRODCHEMICALS

Very good diversification

The 3 months correlation between Penta-Ocean and AIR is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS and Penta-Ocean Construction 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of Penta-Ocean Construction i.e., Penta-Ocean Construction and AIR PRODCHEMICALS go up and down completely randomly.

Pair Corralation between Penta-Ocean Construction and AIR PRODCHEMICALS

Assuming the 90 days horizon Penta-Ocean Construction is expected to generate 1.93 times less return on investment than AIR PRODCHEMICALS. But when comparing it to its historical volatility, Penta Ocean Construction Co is 1.04 times less risky than AIR PRODCHEMICALS. It trades about 0.05 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  23,216  in AIR PRODCHEMICALS on October 7, 2024 and sell it today you would earn a total of  4,414  from holding AIR PRODCHEMICALS or generate 19.01% return on investment over 90 days.

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

Penta Ocean Construction Co  vs.  AIR PRODCHEMICALS

Penta-Ocean Construction

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 Construction is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

AIR PRODCHEMICALS

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AIR PRODCHEMICALS has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, AIR PRODCHEMICALS 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 Construction and AIR PRODCHEMICALS

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

The idea behind Penta Ocean Construction Co and AIR PRODCHEMICALS 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.