Correlation Between China Overseas and Penta Ocean
Can any of the company-specific risk be diversified away by investing in both China Overseas and Penta Ocean 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 China Overseas and Penta Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between China Overseas Land and Penta Ocean Construction Co, you can compare the effects of market volatilities on China Overseas and Penta Ocean 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 China Overseas with a short position of Penta Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of China Overseas and Penta Ocean.
Diversification Opportunities for China Overseas and Penta Ocean
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between China and Penta is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding China Overseas Land and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta Ocean Construc and China Overseas 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 China Overseas Land are associated (or correlated) with Penta Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta Ocean Construc has no effect on the direction of China Overseas i.e., China Overseas and Penta Ocean go up and down completely randomly.
Pair Corralation between China Overseas and Penta Ocean
Assuming the 90 days horizon China Overseas Land is expected to under-perform the Penta Ocean. In addition to that, China Overseas is 1.32 times more volatile than Penta Ocean Construction Co. It trades about -0.1 of its total potential returns per unit of risk. Penta Ocean Construction Co is currently generating about 0.25 per unit of volatility. If you would invest 366.00 in Penta Ocean Construction Co on September 12, 2024 and sell it today you would earn a total of 30.00 from holding Penta Ocean Construction Co or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
China Overseas Land vs. Penta Ocean Construction Co
Performance |
| Timeline |
| China Overseas Land |
| Penta Ocean Construc |
China Overseas and Penta Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with China Overseas and Penta Ocean
The main advantage of trading using opposite China Overseas and Penta Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if China Overseas position performs unexpectedly, Penta Ocean 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 Penta Ocean will offset losses from the drop in Penta Ocean's long position.| China Overseas vs. Superior Plus Corp | China Overseas vs. SIVERS SEMICONDUCTORS AB | China Overseas vs. Reliance Steel Aluminum | China Overseas vs. CHINA HUARONG ENERHD 50 |
| Penta Ocean vs. Superior Plus Corp | Penta Ocean vs. SIVERS SEMICONDUCTORS AB | Penta Ocean vs. Norsk Hydro ASA | Penta Ocean vs. Reliance Steel Aluminum |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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