Correlation Between Penta-Ocean Construction and Charter Communications

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

Diversification Opportunities for Penta-Ocean Construction and Charter Communications

-0.45

Correlation Coefficient

Penta-Ocean Construction  Charter Communications

Very good diversification

The 3 months correlation between Penta-Ocean and Charter is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Charter Communications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Charter Communications 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 Charter Communications. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Charter Communications has no effect on the direction of Penta-Ocean Construction i.e., Penta-Ocean Construction and Charter Communications go up and down completely randomly.

Pair Corralation between Penta-Ocean Construction and Charter Communications

Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 1.07 times more return on investment than Charter Communications. However, Penta-Ocean Construction is 1.07 times more volatile than Charter Communications. It trades about 0.1 of its potential returns per unit of risk. Charter Communications is currently generating about -0.06 per unit of risk. If you would invest  380.00  in Penta Ocean Construction Co on December 1, 2024 and sell it today you would earn a total of  42.00  from holding Penta Ocean Construction Co or generate 11.05% return on investment 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.  Charter Communications

Penta-Ocean Construction

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Penta-Ocean Construction may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Charter Communications

Risk-Adjusted Performance

Very Weak

Over the last 90 days Charter Communications has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Penta-Ocean Construction and Charter Communications

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

The idea behind Penta Ocean Construction Co and Charter Communications 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.