Correlation Between Penta-Ocean Construction and OPERA SOFTWARE

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

Diversification Opportunities for Penta-Ocean Construction and OPERA SOFTWARE

-0.01

Correlation Coefficient

Penta-Ocean Construction  OPERA SOFTWARE

Good diversification

The 3 months correlation between Penta-Ocean and OPERA is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and OPERA SOFTWARE in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPERA SOFTWARE 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 OPERA SOFTWARE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPERA SOFTWARE has no effect on the direction of Penta-Ocean Construction i.e., Penta-Ocean Construction and OPERA SOFTWARE go up and down completely randomly.

Pair Corralation between Penta-Ocean Construction and OPERA SOFTWARE

Assuming the 90 days horizon Penta Ocean Construction Co is expected to under-perform the OPERA SOFTWARE. But the stock apears to be less risky and, when comparing its historical volatility, Penta Ocean Construction Co is 1.39 times less risky than OPERA SOFTWARE. The stock trades about -0.01 of its potential returns per unit of risk. The OPERA SOFTWARE is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  75.00  in OPERA SOFTWARE on October 11, 2024 and sell it today you would lose (10.00) from holding OPERA SOFTWARE or give up 13.33% of portfolio value over 90 days.

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

Penta Ocean Construction Co  vs.  OPERA SOFTWARE

Penta-Ocean Construction

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. 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.

OPERA SOFTWARE

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days OPERA SOFTWARE has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, OPERA SOFTWARE is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Penta-Ocean Construction and OPERA SOFTWARE

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

The idea behind Penta Ocean Construction Co and OPERA SOFTWARE 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.