Correlation Between Pieridae Energy and Petrus Resources

Can any of the company-specific risk be diversified away by investing in both Pieridae Energy and Petrus Resources 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 Pieridae Energy and Petrus Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pieridae Energy Limited and Petrus Resources, you can compare the effects of market volatilities on Pieridae Energy and Petrus Resources 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 Pieridae Energy with a short position of Petrus Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pieridae Energy and Petrus Resources.

Diversification Opportunities for Pieridae Energy and Petrus Resources

-0.27

Correlation Coefficient

Pieridae Energy  Petrus Resources

Very good diversification

The 3 months correlation between Pieridae and Petrus is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Pieridae Energy Limited and Petrus Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrus Resources and Pieridae Energy 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 Pieridae Energy Limited are associated (or correlated) with Petrus Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrus Resources has no effect on the direction of Pieridae Energy i.e., Pieridae Energy and Petrus Resources go up and down completely randomly.

Pair Corralation between Pieridae Energy and Petrus Resources

Assuming the 90 days horizon Pieridae Energy Limited is expected to under-perform the Petrus Resources. In addition to that, Pieridae Energy is 2.37 times more volatile than Petrus Resources. It trades about -0.01 of its total potential returns per unit of risk. Petrus Resources is currently generating about 0.04 per unit of volatility. If you would invest  95.00  in Petrus Resources on October 7, 2024 and sell it today you would earn a total of  7.00  from holding Petrus Resources or generate 7.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Pieridae Energy Limited  vs.  Petrus Resources

Pieridae Energy

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Pieridae Energy Limited are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Pieridae Energy reported solid returns over the last few months and may actually be approaching a breakup point.

Petrus Resources

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Pieridae Energy and Petrus Resources

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

The idea behind Pieridae Energy Limited and Petrus Resources 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.