Correlation Between Penta Ocean and SANOK RUBBER

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

By analyzing existing cross correlation between Penta Ocean Construction Co and SANOK RUBBER ZY, you can compare the effects of market volatilities on Penta Ocean and SANOK RUBBER 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 Penta Ocean with a short position of SANOK RUBBER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and SANOK RUBBER.

Diversification Opportunities for Penta Ocean and SANOK RUBBER

0.31

Correlation Coefficient

Penta Ocean  SANOK RUBBER

Weak diversification

The 3 months correlation between Penta and SANOK is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and SANOK RUBBER ZY in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SANOK RUBBER ZY and Penta Ocean 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 Penta Ocean Construction Co are associated (or correlated) with SANOK RUBBER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SANOK RUBBER ZY has no effect on the direction of Penta Ocean i.e., Penta Ocean and SANOK RUBBER go up and down completely randomly.

Pair Corralation between Penta Ocean and SANOK RUBBER

Assuming the 90 days horizon Penta Ocean is expected to generate 12.46 times less return on investment than SANOK RUBBER. But when comparing it to its historical volatility, Penta Ocean Construction Co is 2.54 times less risky than SANOK RUBBER. It trades about 0.02 of its potential returns per unit of risk. SANOK RUBBER ZY is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  353.00  in SANOK RUBBER ZY on September 17, 2024 and sell it today you would earn a total of  99.00  from holding SANOK RUBBER ZY or generate 28.05% return on investment over 90 days.

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

Penta Ocean Construction Co  vs.  SANOK RUBBER ZY

Penta Ocean Construc

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Penta Ocean is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SANOK RUBBER ZY

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SANOK RUBBER ZY are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, SANOK RUBBER reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penta Ocean and SANOK RUBBER

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

The idea behind Penta Ocean Construction Co and SANOK RUBBER ZY 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.