Correlation Between Penta Ocean and NEXON
Can any of the company-specific risk be diversified away by investing in both Penta Ocean and NEXON 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 NEXON 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 NEXON Co, you can compare the effects of market volatilities on Penta Ocean and NEXON 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 NEXON. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and NEXON.
Diversification Opportunities for Penta Ocean and NEXON
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penta and NEXON is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and NEXON Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NEXON 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 NEXON. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NEXON has no effect on the direction of Penta Ocean i.e., Penta Ocean and NEXON go up and down completely randomly.
Pair Corralation between Penta Ocean and NEXON
Assuming the 90 days horizon Penta Ocean Construction Co is expected to under-perform the NEXON. But the stock apears to be less risky and, when comparing its historical volatility, Penta Ocean Construction Co is 3.3 times less risky than NEXON. The stock trades about -0.04 of its potential returns per unit of risk. The NEXON Co is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 701.00 in NEXON Co on September 12, 2024 and sell it today you would earn a total of 659.00 from holding NEXON Co or generate 94.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Penta Ocean Construction Co vs. NEXON Co
Performance |
| Timeline |
| Penta Ocean Construc |
| NEXON |
Penta Ocean and NEXON Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta Ocean and NEXON
The main advantage of trading using opposite Penta Ocean and NEXON positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta Ocean position performs unexpectedly, NEXON 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 NEXON will offset losses from the drop in NEXON's long position.| Penta Ocean vs. Superior Plus Corp | Penta Ocean vs. SIVERS SEMICONDUCTORS AB | Penta Ocean vs. Norsk Hydro ASA | Penta Ocean vs. Reliance Steel Aluminum |
| NEXON vs. Harmony Gold Mining | NEXON vs. GRIFFIN MINING LTD | NEXON vs. Federal Agricultural Mortgage | NEXON vs. Penta Ocean Construction Co |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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