Correlation Between Pungguk Ethanol and MetaLabs

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

By analyzing existing cross correlation between Pungguk Ethanol Industrial and MetaLabs Co, you can compare the effects of market volatilities on Pungguk Ethanol and MetaLabs 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 Pungguk Ethanol with a short position of MetaLabs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pungguk Ethanol and MetaLabs.

Diversification Opportunities for Pungguk Ethanol and MetaLabs

0.69

Correlation Coefficient

Pungguk Ethanol  MetaLabs

Poor diversification

The 3 months correlation between Pungguk and MetaLabs is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Pungguk Ethanol Industrial and MetaLabs Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MetaLabs and Pungguk Ethanol 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 Pungguk Ethanol Industrial are associated (or correlated) with MetaLabs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MetaLabs has no effect on the direction of Pungguk Ethanol i.e., Pungguk Ethanol and MetaLabs go up and down completely randomly.

Pair Corralation between Pungguk Ethanol and MetaLabs

Assuming the 90 days trading horizon Pungguk Ethanol Industrial is expected to generate 0.44 times more return on investment than MetaLabs. However, Pungguk Ethanol Industrial is 2.29 times less risky than MetaLabs. It trades about -0.13 of its potential returns per unit of risk. MetaLabs Co is currently generating about -0.17 per unit of risk. If you would invest  1,069,000  in Pungguk Ethanol Industrial on September 1, 2024 and sell it today you would lose (82,000) from holding Pungguk Ethanol Industrial or give up 7.67% of portfolio value over 90 days.

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

Pungguk Ethanol Industrial  vs.  MetaLabs Co

Pungguk Ethanol Indu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pungguk Ethanol Industrial has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

MetaLabs

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MetaLabs Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in December 2024. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Pungguk Ethanol and MetaLabs

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

The idea behind Pungguk Ethanol Industrial and MetaLabs Co 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.