Correlation Between Pacific Petroleum and Book

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

By analyzing existing cross correlation between Pacific Petroleum Transportation and Book And Educational, you can compare the effects of market volatilities on Pacific Petroleum and Book 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 Pacific Petroleum with a short position of Book. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Book.

Diversification Opportunities for Pacific Petroleum and Book

-0.05

Correlation Coefficient

Pacific Petroleum  Book

Good diversification

The 3 months correlation between Pacific and Book is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and Book And Educational in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Book And Educational and Pacific Petroleum 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 Pacific Petroleum Transportation are associated (or correlated) with Book. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Book And Educational has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and Book go up and down completely randomly.

Pair Corralation between Pacific Petroleum and Book

Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to under-perform the Book. But the stock apears to be less risky and, when comparing its historical volatility, Pacific Petroleum Transportation is 1.91 times less risky than Book. The stock trades about -0.13 of its potential returns per unit of risk. The Book And Educational is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,573,404  in Book And Educational on December 23, 2024 and sell it today you would earn a total of  76,596  from holding Book And Educational or generate 4.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	50.85%
Values	Daily Returns

Pacific Petroleum Transportati  vs.  Book And Educational

Pacific Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Pacific Petroleum Transportation has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Book And Educational

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Book And Educational are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Book displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacific Petroleum and Book

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

The idea behind Pacific Petroleum Transportation and Book And Educational 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.

Check out your portfolio center.

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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.