Correlation Between Penta-Ocean Construction and HK Electric
Can any of the company-specific risk be diversified away by investing in both Penta-Ocean Construction and HK Electric 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 HK Electric 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 HK Electric Investments, you can compare the effects of market volatilities on Penta-Ocean Construction and HK Electric 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 HK Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta-Ocean Construction and HK Electric.
Diversification Opportunities for Penta-Ocean Construction and HK Electric
0.27 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Penta-Ocean and HKT is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and HK Electric Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HK Electric Investments 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 HK Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HK Electric Investments has no effect on the direction of Penta-Ocean Construction i.e., Penta-Ocean Construction and HK Electric go up and down completely randomly.
Pair Corralation between Penta-Ocean Construction and HK Electric
Assuming the 90 days horizon Penta Ocean Construction Co is expected to under-perform the HK Electric. But the stock apears to be less risky and, when comparing its historical volatility, Penta Ocean Construction Co is 2.01 times less risky than HK Electric. The stock trades about 0.0 of its potential returns per unit of risk. The HK Electric Investments is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 17.00 in HK Electric Investments on October 16, 2024 and sell it today you would earn a total of 48.00 from holding HK Electric Investments or generate 282.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Penta Ocean Construction Co vs. HK Electric Investments
Performance |
| Timeline |
| Penta-Ocean Construction |
| HK Electric Investments |
Penta-Ocean Construction and HK Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta-Ocean Construction and HK Electric
The main advantage of trading using opposite Penta-Ocean Construction and HK Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta-Ocean Construction position performs unexpectedly, HK Electric 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 HK Electric will offset losses from the drop in HK Electric's long position.| Penta-Ocean Construction vs. Tyson Foods | Penta-Ocean Construction vs. CN MODERN DAIRY | Penta-Ocean Construction vs. COFCO Joycome Foods | Penta-Ocean Construction vs. INDOFOOD AGRI RES |
| HK Electric vs. De Grey Mining | HK Electric vs. MINCO SILVER | HK Electric vs. Globex Mining Enterprises | HK Electric vs. MOLSON RS BEVERAGE |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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