Correlation Between Penta Ocean and DAIRY FARM

Can any of the company-specific risk be diversified away by investing in both Penta Ocean and DAIRY FARM 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 DAIRY FARM 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 DAIRY FARM INTL, you can compare the effects of market volatilities on Penta Ocean and DAIRY FARM 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 DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and DAIRY FARM.

Diversification Opportunities for Penta Ocean and DAIRY FARM

-0.18

Correlation Coefficient

Penta Ocean  DAIRY FARM

Good diversification

The 3 months correlation between Penta and DAIRY is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL 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 DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of Penta Ocean i.e., Penta Ocean and DAIRY FARM go up and down completely randomly.

Pair Corralation between Penta Ocean and DAIRY FARM

Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 0.79 times more return on investment than DAIRY FARM. However, Penta Ocean Construction Co is 1.26 times less risky than DAIRY FARM. It trades about 0.17 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.06 per unit of risk. If you would invest  360.00  in Penta Ocean Construction Co on September 15, 2024 and sell it today you would earn a total of  20.00  from holding Penta Ocean Construction Co or generate 5.56% return on investment over 90 days.

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

Penta Ocean Construction Co  vs.  DAIRY FARM INTL

Penta Ocean Construc

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 2 (%) 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.

DAIRY FARM INTL

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in DAIRY FARM INTL are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, DAIRY FARM unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Penta Ocean and DAIRY FARM

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

The idea behind Penta Ocean Construction Co and DAIRY FARM INTL 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.