Correlation Between Berkshire Focus and Pin Oak

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

By analyzing existing cross correlation between Berkshire Focus and Pin Oak Equity, you can compare the effects of market volatilities on Berkshire Focus and Pin Oak 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 Berkshire Focus with a short position of Pin Oak. Check out your portfolio center. Please also check ongoing floating volatility patterns of Berkshire Focus and Pin Oak.

Diversification Opportunities for Berkshire Focus and Pin Oak

0.9

Correlation Coefficient

Berkshire Focus  Pin Oak

Almost no diversification

The 3 months correlation between Berkshire and Pin is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Berkshire Focus and Pin Oak Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pin Oak Equity and Berkshire Focus 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 Berkshire Focus are associated (or correlated) with Pin Oak. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pin Oak Equity has no effect on the direction of Berkshire Focus i.e., Berkshire Focus and Pin Oak go up and down completely randomly.

Pair Corralation between Berkshire Focus and Pin Oak

Assuming the 90 days horizon Berkshire Focus is expected to generate 2.14 times more return on investment than Pin Oak. However, Berkshire Focus is 2.14 times more volatile than Pin Oak Equity. It trades about 0.29 of its potential returns per unit of risk. Pin Oak Equity is currently generating about 0.12 per unit of risk. If you would invest  2,230  in Berkshire Focus on August 31, 2024 and sell it today you would earn a total of  809.00  from holding Berkshire Focus or generate 36.28% return on investment over 90 days.

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

Berkshire Focus  vs.  Pin Oak Equity

Berkshire Focus

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Berkshire Focus are ranked lower than 22 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Berkshire Focus showed solid returns over the last few months and may actually be approaching a breakup point.

Pin Oak Equity

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pin Oak Equity are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pin Oak is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Berkshire Focus and Pin Oak

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

The idea behind Berkshire Focus and Pin Oak Equity 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.