Correlation Between Penta Ocean and Reinsurance Group

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

Diversification Opportunities for Penta Ocean and Reinsurance Group

-0.31

Correlation Coefficient

Penta Ocean  Reinsurance Group

Very good diversification

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

Pair Corralation between Penta Ocean and Reinsurance Group

Assuming the 90 days horizon Penta Ocean is expected to generate 69.0 times less return on investment than Reinsurance Group. But when comparing it to its historical volatility, Penta Ocean Construction Co is 1.64 times less risky than Reinsurance Group. It trades about 0.0 of its potential returns per unit of risk. Reinsurance Group of is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  19,415  in Reinsurance Group of on October 1, 2024 and sell it today you would earn a total of  785.00  from holding Reinsurance Group of or generate 4.04% 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.  Reinsurance Group of

Penta Ocean Construc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Penta Ocean Construction Co has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Reinsurance Group

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Reinsurance Group of are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Reinsurance Group is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Penta Ocean and Reinsurance Group

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

The idea behind Penta Ocean Construction Co and Reinsurance Group of 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.