Correlation Between Penta-Ocean Construction and Newmont

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

Diversification Opportunities for Penta-Ocean Construction and Newmont

0.45

Correlation Coefficient

Penta-Ocean Construction  Newmont

Very weak diversification

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

Pair Corralation between Penta-Ocean Construction and Newmont

Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 0.65 times more return on investment than Newmont. However, Penta Ocean Construction Co is 1.54 times less risky than Newmont. It trades about 0.04 of its potential returns per unit of risk. Newmont is currently generating about -0.02 per unit of risk. If you would invest  370.00  in Penta Ocean Construction Co on October 4, 2024 and sell it today you would earn a total of  22.00  from holding Penta Ocean Construction Co or generate 5.95% 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.  Newmont

Penta-Ocean Construction

Risk-Adjusted Performance

0 of 100

Very Weak

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

Newmont

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Newmont has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Pair Trading with Penta-Ocean Construction and Newmont

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

The idea behind Penta Ocean Construction Co and Newmont 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.