Correlation Between Perma Pipe and Owens Corning

Can any of the company-specific risk be diversified away by investing in both Perma Pipe and Owens Corning 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 Perma Pipe and Owens Corning into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Perma Pipe International Holdings and Owens Corning, you can compare the effects of market volatilities on Perma Pipe and Owens Corning 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 Perma Pipe with a short position of Owens Corning. Check out your portfolio center. Please also check ongoing floating volatility patterns of Perma Pipe and Owens Corning.

Diversification Opportunities for Perma Pipe and Owens Corning

0.49

Correlation Coefficient

Perma Pipe  Owens Corning

Very weak diversification

The 3 months correlation between Perma and Owens is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Perma Pipe International Holdi and Owens Corning in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Owens Corning and Perma Pipe 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 Perma Pipe International Holdings are associated (or correlated) with Owens Corning. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Owens Corning has no effect on the direction of Perma Pipe i.e., Perma Pipe and Owens Corning go up and down completely randomly.

Pair Corralation between Perma Pipe and Owens Corning

Given the investment horizon of 90 days Perma Pipe International Holdings is expected to generate 3.4 times more return on investment than Owens Corning. However, Perma Pipe is 3.4 times more volatile than Owens Corning. It trades about -0.11 of its potential returns per unit of risk. Owens Corning is currently generating about -0.59 per unit of risk. If you would invest  1,684  in Perma Pipe International Holdings on October 5, 2024 and sell it today you would lose (235.00) from holding Perma Pipe International Holdings or give up 13.95% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.24%
Values	Daily Returns

Perma Pipe International Holdi  vs.  Owens Corning

Perma Pipe Internati

Risk-Adjusted Performance

4 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Perma Pipe International Holdings are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak forward indicators, Perma Pipe demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Owens Corning

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Perma Pipe and Owens Corning

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

The idea behind Perma Pipe International Holdings and Owens Corning 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.