Correlation Between Penta-Ocean Construction and Nike
Can any of the company-specific risk be diversified away by investing in both Penta-Ocean Construction and Nike 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 Nike 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 Nike Inc, you can compare the effects of market volatilities on Penta-Ocean Construction and Nike 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 Nike. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta-Ocean Construction and Nike.
Diversification Opportunities for Penta-Ocean Construction and Nike
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penta-Ocean and Nike is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Nike Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nike Inc 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 Nike. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nike Inc has no effect on the direction of Penta-Ocean Construction i.e., Penta-Ocean Construction and Nike go up and down completely randomly.
Pair Corralation between Penta-Ocean Construction and Nike
Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 0.84 times more return on investment than Nike. However, Penta Ocean Construction Co is 1.2 times less risky than Nike. It trades about -0.03 of its potential returns per unit of risk. Nike Inc is currently generating about -0.03 per unit of risk. If you would invest 450.00 in Penta Ocean Construction Co on October 8, 2024 and sell it today you would lose (50.00) from holding Penta Ocean Construction Co or give up 11.11% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Penta Ocean Construction Co vs. Nike Inc
Performance |
Timeline |
Penta-Ocean Construction |
Nike Inc |
Penta-Ocean Construction and Nike Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Penta-Ocean Construction and Nike
The main advantage of trading using opposite Penta-Ocean Construction and Nike positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta-Ocean Construction position performs unexpectedly, Nike 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 Nike will offset losses from the drop in Nike's long position.Penta-Ocean Construction vs. Superior Plus Corp | Penta-Ocean Construction vs. NMI Holdings | Penta-Ocean Construction vs. SIVERS SEMICONDUCTORS AB | Penta-Ocean Construction vs. Talanx AG |
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Check out your portfolio center.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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