Correlation Between Penta Ocean and Suncorp Group

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

Diversification Opportunities for Penta Ocean and Suncorp Group

-0.62

Correlation Coefficient

Penta Ocean  Suncorp Group

Excellent diversification

The 3 months correlation between Penta and Suncorp is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Suncorp Group Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Suncorp Group Limited 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 Suncorp Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Suncorp Group Limited has no effect on the direction of Penta Ocean i.e., Penta Ocean and Suncorp Group go up and down completely randomly.

Pair Corralation between Penta Ocean and Suncorp Group

Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 0.52 times more return on investment than Suncorp Group. However, Penta Ocean Construction Co is 1.94 times less risky than Suncorp Group. It trades about 0.13 of its potential returns per unit of risk. Suncorp Group Limited is currently generating about -0.05 per unit of risk. If you would invest  380.00  in Penta Ocean Construction Co on December 23, 2024 and sell it today you would earn a total of  66.00  from holding Penta Ocean Construction Co or generate 17.37% return on investment over 90 days.

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

Penta Ocean Construction Co  vs.  Suncorp Group Limited

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 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Penta Ocean reported solid returns over the last few months and may actually be approaching a breakup point.

Suncorp Group Limited

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Penta Ocean and Suncorp Group

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

The idea behind Penta Ocean Construction Co and Suncorp Group Limited 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.