Correlation Between Pacific Petroleum and CEO Group

Can any of the company-specific risk be diversified away by investing in both Pacific Petroleum and CEO 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 Pacific Petroleum and CEO Group into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacific Petroleum Transportation and CEO Group JSC, you can compare the effects of market volatilities on Pacific Petroleum and CEO 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 Pacific Petroleum with a short position of CEO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and CEO Group.

Diversification Opportunities for Pacific Petroleum and CEO Group

-0.53

Correlation Coefficient

Pacific Petroleum  CEO Group

Excellent diversification

The 3 months correlation between Pacific and CEO is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and CEO Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEO Group JSC and Pacific Petroleum 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 Pacific Petroleum Transportation are associated (or correlated) with CEO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEO Group JSC has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and CEO Group go up and down completely randomly.

Pair Corralation between Pacific Petroleum and CEO Group

Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to generate 0.9 times more return on investment than CEO Group. However, Pacific Petroleum Transportation is 1.11 times less risky than CEO Group. It trades about 0.4 of its potential returns per unit of risk. CEO Group JSC is currently generating about -0.17 per unit of risk. If you would invest  1,620,000  in Pacific Petroleum Transportation on September 30, 2024 and sell it today you would earn a total of  150,000  from holding Pacific Petroleum Transportation or generate 9.26% return on investment over 90 days.

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

Pacific Petroleum Transportati  vs.  CEO Group JSC

Pacific Petroleum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Petroleum Transportation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pacific Petroleum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CEO Group JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEO Group JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Pacific Petroleum and CEO Group

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

The idea behind Pacific Petroleum Transportation and CEO Group JSC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..