Correlation Between Penta Ocean and TIANDE CHEMICAL

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

Diversification Opportunities for Penta Ocean and TIANDE CHEMICAL

0.0

Correlation Coefficient

Penta Ocean  TIANDE CHEMICAL

Pay attention - limited upside

The 3 months correlation between Penta and TIANDE is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and TIANDE CHEMICAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TIANDE CHEMICAL 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 TIANDE CHEMICAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TIANDE CHEMICAL has no effect on the direction of Penta Ocean i.e., Penta Ocean and TIANDE CHEMICAL go up and down completely randomly.

Pair Corralation between Penta Ocean and TIANDE CHEMICAL

If you would invest  380.00  in Penta Ocean Construction Co on December 22, 2024 and sell it today you would earn a total of  52.00  from holding Penta Ocean Construction Co or generate 13.68% return on investment over 90 days.

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

Penta Ocean Construction Co  vs.  TIANDE CHEMICAL

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.

TIANDE CHEMICAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days TIANDE CHEMICAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, TIANDE CHEMICAL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Penta Ocean and TIANDE CHEMICAL

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

The idea behind Penta Ocean Construction Co and TIANDE CHEMICAL 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.