Correlation Between Penta Ocean and Fair Value

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

Diversification Opportunities for Penta Ocean and Fair Value

-0.09

Correlation Coefficient

Penta Ocean  Fair Value

Good diversification

The 3 months correlation between Penta and Fair is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Fair Value Reit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fair Value Reit 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 Fair Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fair Value Reit has no effect on the direction of Penta Ocean i.e., Penta Ocean and Fair Value go up and down completely randomly.

Pair Corralation between Penta Ocean and Fair Value

Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 1.33 times more return on investment than Fair Value. However, Penta Ocean is 1.33 times more volatile than Fair Value Reit. It trades about 0.11 of its potential returns per unit of risk. Fair Value Reit is currently generating about 0.0 per unit of risk. If you would invest  389.00  in Penta Ocean Construction Co on December 31, 2024 and sell it today you would earn a total of  55.00  from holding Penta Ocean Construction Co or generate 14.14% 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.  Fair Value Reit

Penta Ocean Construc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Penta Ocean reported solid returns over the last few months and may actually be approaching a breakup point.

Fair Value Reit

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Penta Ocean and Fair Value

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

The idea behind Penta Ocean Construction Co and Fair Value Reit 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.