Correlation Between Penta Ocean and EAST SIDE

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

Diversification Opportunities for Penta Ocean and EAST SIDE

-0.48

Correlation Coefficient

Penta Ocean  EAST SIDE

Very good diversification

The 3 months correlation between Penta and EAST is -0.48. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and EAST SIDE GAMES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EAST SIDE GAMES 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 EAST SIDE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EAST SIDE GAMES has no effect on the direction of Penta Ocean i.e., Penta Ocean and EAST SIDE go up and down completely randomly.

Pair Corralation between Penta Ocean and EAST SIDE

Assuming the 90 days horizon Penta Ocean Construction Co is expected to under-perform the EAST SIDE. But the stock apears to be less risky and, when comparing its historical volatility, Penta Ocean Construction Co is 3.84 times less risky than EAST SIDE. The stock trades about 0.0 of its potential returns per unit of risk. The EAST SIDE GAMES is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  61.00  in EAST SIDE GAMES on October 23, 2024 and sell it today you would lose (21.00) from holding EAST SIDE GAMES or give up 34.43% of portfolio value over 90 days.

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

Penta Ocean Construction Co  vs.  EAST SIDE GAMES

Penta Ocean Construc

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 5 (%) 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 current stock price disturbance, may contribute to mid-run losses for the stockholders.

EAST SIDE GAMES

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Penta Ocean and EAST SIDE

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

The idea behind Penta Ocean Construction Co and EAST SIDE GAMES 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.