Correlation Between Martin Marietta and Penta Ocean
Can any of the company-specific risk be diversified away by investing in both Martin Marietta and Penta Ocean 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 Martin Marietta and Penta Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Martin Marietta Materials and Penta Ocean Construction Co, you can compare the effects of market volatilities on Martin Marietta and Penta Ocean 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 Martin Marietta with a short position of Penta Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Martin Marietta and Penta Ocean.
Diversification Opportunities for Martin Marietta and Penta Ocean
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Martin and Penta is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Martin Marietta Materials and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta Ocean Construc and Martin Marietta 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 Martin Marietta Materials are associated (or correlated) with Penta Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta Ocean Construc has no effect on the direction of Martin Marietta i.e., Martin Marietta and Penta Ocean go up and down completely randomly.
Pair Corralation between Martin Marietta and Penta Ocean
Assuming the 90 days trading horizon Martin Marietta Materials is expected to under-perform the Penta Ocean. But the stock apears to be less risky and, when comparing its historical volatility, Martin Marietta Materials is 1.81 times less risky than Penta Ocean. The stock trades about -0.74 of its potential returns per unit of risk. The Penta Ocean Construction Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 378.00 in Penta Ocean Construction Co on September 24, 2024 and sell it today you would earn a total of 0.00 from holding Penta Ocean Construction Co or generate 0.0% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Martin Marietta Materials vs. Penta Ocean Construction Co
Performance |
Timeline |
Martin Marietta Materials |
Penta Ocean Construc |
Martin Marietta and Penta Ocean Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Martin Marietta and Penta Ocean
The main advantage of trading using opposite Martin Marietta and Penta Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Martin Marietta position performs unexpectedly, Penta Ocean 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 Penta Ocean will offset losses from the drop in Penta Ocean's long position.Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc | Martin Marietta vs. Apple Inc |
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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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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