Correlation Between Penta Ocean and Federal Agricultural
Can any of the company-specific risk be diversified away by investing in both Penta Ocean and Federal Agricultural 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 Federal Agricultural 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 Federal Agricultural Mortgage, you can compare the effects of market volatilities on Penta Ocean and Federal Agricultural 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 Federal Agricultural. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and Federal Agricultural.
Diversification Opportunities for Penta Ocean and Federal Agricultural
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Penta and Federal is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Federal Agricultural Mortgage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Agricultural 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 Federal Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Agricultural has no effect on the direction of Penta Ocean i.e., Penta Ocean and Federal Agricultural go up and down completely randomly.
Pair Corralation between Penta Ocean and Federal Agricultural
Assuming the 90 days horizon Penta Ocean Construction Co is expected to under-perform the Federal Agricultural. But the stock apears to be less risky and, when comparing its historical volatility, Penta Ocean Construction Co is 1.44 times less risky than Federal Agricultural. The stock trades about -0.02 of its potential returns per unit of risk. The Federal Agricultural Mortgage is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 16,262 in Federal Agricultural Mortgage on September 10, 2024 and sell it today you would earn a total of 3,638 from holding Federal Agricultural Mortgage or generate 22.37% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Penta Ocean Construction Co vs. Federal Agricultural Mortgage
Performance |
Timeline |
Penta Ocean Construc |
Federal Agricultural |
Penta Ocean and Federal Agricultural Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Penta Ocean and Federal Agricultural
The main advantage of trading using opposite Penta Ocean and Federal Agricultural positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta Ocean position performs unexpectedly, Federal Agricultural 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 Federal Agricultural will offset losses from the drop in Federal Agricultural's long position.Penta Ocean vs. Jiangsu Expressway | Penta Ocean vs. Superior Plus Corp | Penta Ocean vs. NMI Holdings | Penta Ocean vs. Origin Agritech |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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