Correlation Between Torm PLC and Plains All

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

By analyzing existing cross correlation between Torm PLC Class and Plains All American, you can compare the effects of market volatilities on Torm PLC and Plains All 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 Torm PLC with a short position of Plains All. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torm PLC and Plains All.

Diversification Opportunities for Torm PLC and Plains All

-0.04

Correlation Coefficient

Torm PLC  Plains All

Good diversification

The 3 months correlation between Torm and Plains is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Torm PLC Class and Plains All American in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Plains All American and Torm PLC 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 Torm PLC Class are associated (or correlated) with Plains All. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Plains All American has no effect on the direction of Torm PLC i.e., Torm PLC and Plains All go up and down completely randomly.

Pair Corralation between Torm PLC and Plains All

Given the investment horizon of 90 days Torm PLC is expected to generate 73.84 times less return on investment than Plains All. In addition to that, Torm PLC is 1.96 times more volatile than Plains All American. It trades about 0.0 of its total potential returns per unit of risk. Plains All American is currently generating about 0.22 per unit of volatility. If you would invest  1,647  in Plains All American on December 27, 2024 and sell it today you would earn a total of  391.00  from holding Plains All American or generate 23.74% return on investment over 90 days.

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

Torm PLC Class  vs.  Plains All American

Torm PLC Class

Risk-Adjusted Performance

Very Weak

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

Plains All American

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Plains All American are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Plains All sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Torm PLC and Plains All

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

The idea behind Torm PLC Class and Plains All American 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.