Correlation Between Penta Ocean and BP PLC
Can any of the company-specific risk be diversified away by investing in both Penta Ocean and BP PLC 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 BP PLC 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 BP PLC DZ1, you can compare the effects of market volatilities on Penta Ocean and BP PLC 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 BP PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and BP PLC.
Diversification Opportunities for Penta Ocean and BP PLC
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penta and BPE is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and BP PLC DZ1 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BP PLC DZ1 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 BP PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BP PLC DZ1 has no effect on the direction of Penta Ocean i.e., Penta Ocean and BP PLC go up and down completely randomly.
Pair Corralation between Penta Ocean and BP PLC
Assuming the 90 days horizon Penta Ocean is expected to generate 1.58 times less return on investment than BP PLC. But when comparing it to its historical volatility, Penta Ocean Construction Co is 1.5 times less risky than BP PLC. It trades about 0.17 of its potential returns per unit of risk. BP PLC DZ1 is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 434.00 in BP PLC DZ1 on September 15, 2024 and sell it today you would earn a total of 38.00 from holding BP PLC DZ1 or generate 8.76% 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. BP PLC DZ1
Performance |
| Timeline |
| Penta Ocean Construc |
| BP PLC DZ1 |
Penta Ocean and BP PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta Ocean and BP PLC
The main advantage of trading using opposite Penta Ocean and BP PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta Ocean position performs unexpectedly, BP PLC 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 BP PLC will offset losses from the drop in BP PLC'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 |
| BP PLC vs. Autohome ADR | BP PLC vs. Aedas Homes SA | BP PLC vs. LGI Homes | BP PLC 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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