Correlation Between Penta Ocean and CPU SOFTWAREHOUSE

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

Diversification Opportunities for Penta Ocean and CPU SOFTWAREHOUSE

0.43

Correlation Coefficient

Penta Ocean  CPU SOFTWAREHOUSE

Very weak diversification

The 3 months correlation between Penta and CPU is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and CPU SOFTWAREHOUSE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CPU SOFTWAREHOUSE 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 CPU SOFTWAREHOUSE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CPU SOFTWAREHOUSE has no effect on the direction of Penta Ocean i.e., Penta Ocean and CPU SOFTWAREHOUSE go up and down completely randomly.

Pair Corralation between Penta Ocean and CPU SOFTWAREHOUSE

Assuming the 90 days horizon Penta Ocean is expected to generate 7.2 times less return on investment than CPU SOFTWAREHOUSE. But when comparing it to its historical volatility, Penta Ocean Construction Co is 6.17 times less risky than CPU SOFTWAREHOUSE. It trades about 0.08 of its potential returns per unit of risk. CPU SOFTWAREHOUSE is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  98.00  in CPU SOFTWAREHOUSE on October 25, 2024 and sell it today you would earn a total of  30.00  from holding CPU SOFTWAREHOUSE or generate 30.61% return on investment over 90 days.

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

Penta Ocean Construction Co  vs.  CPU SOFTWAREHOUSE

Penta Ocean Construc

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady basic indicators, Penta Ocean may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CPU SOFTWAREHOUSE

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in CPU SOFTWAREHOUSE are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, CPU SOFTWAREHOUSE exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penta Ocean and CPU SOFTWAREHOUSE

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

The idea behind Penta Ocean Construction Co and CPU SOFTWAREHOUSE 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.