Correlation Between Penta-Ocean Construction and Calibre Mining

Can any of the company-specific risk be diversified away by investing in both Penta-Ocean Construction and Calibre Mining 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 Construction and Calibre Mining 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 Calibre Mining Corp, you can compare the effects of market volatilities on Penta-Ocean Construction and Calibre Mining 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 Construction with a short position of Calibre Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta-Ocean Construction and Calibre Mining.

Diversification Opportunities for Penta-Ocean Construction and Calibre Mining

0.36

Correlation Coefficient

Penta-Ocean Construction  Calibre Mining

Weak diversification

The 3 months correlation between Penta-Ocean and Calibre is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Calibre Mining Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calibre Mining Corp and Penta-Ocean Construction 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 Calibre Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calibre Mining Corp has no effect on the direction of Penta-Ocean Construction i.e., Penta-Ocean Construction and Calibre Mining go up and down completely randomly.

Pair Corralation between Penta-Ocean Construction and Calibre Mining

Assuming the 90 days horizon Penta Ocean Construction Co is expected to under-perform the Calibre Mining. But the stock apears to be less risky and, when comparing its historical volatility, Penta Ocean Construction Co is 1.84 times less risky than Calibre Mining. The stock trades about -0.02 of its potential returns per unit of risk. The Calibre Mining Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  152.00  in Calibre Mining Corp on September 5, 2024 and sell it today you would earn a total of  17.00  from holding Calibre Mining Corp or generate 11.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

Penta Ocean Construction Co  vs.  Calibre Mining Corp

Penta-Ocean Construction

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 Construction is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Calibre Mining Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Calibre Mining Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Calibre Mining may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Penta-Ocean Construction and Calibre Mining

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

The idea behind Penta Ocean Construction Co and Calibre Mining Corp 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.