Correlation Between Penta-Ocean Construction and KLA
Can any of the company-specific risk be diversified away by investing in both Penta-Ocean Construction and KLA 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 KLA 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 KLA Corporation, you can compare the effects of market volatilities on Penta-Ocean Construction and KLA 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 KLA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta-Ocean Construction and KLA.
Diversification Opportunities for Penta-Ocean Construction and KLA
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penta-Ocean and KLA is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and KLA Corp. in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KLA Corporation 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 KLA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KLA Corporation has no effect on the direction of Penta-Ocean Construction i.e., Penta-Ocean Construction and KLA go up and down completely randomly.
Pair Corralation between Penta-Ocean Construction and KLA
Assuming the 90 days horizon Penta-Ocean Construction is expected to generate 2.46 times less return on investment than KLA. In addition to that, Penta-Ocean Construction is 1.18 times more volatile than KLA Corporation. It trades about 0.06 of its total potential returns per unit of risk. KLA Corporation is currently generating about 0.18 per unit of volatility. If you would invest 65,970 in KLA Corporation on November 27, 2024 and sell it today you would earn a total of 5,980 from holding KLA Corporation or generate 9.06% 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. KLA Corp.
Performance |
| Timeline |
| Penta-Ocean Construction |
| KLA Corporation |
Penta-Ocean Construction and KLA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta-Ocean Construction and KLA
The main advantage of trading using opposite Penta-Ocean Construction and KLA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta-Ocean Construction position performs unexpectedly, KLA 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 KLA will offset losses from the drop in KLA's long position.| Penta-Ocean Construction vs. CN MODERN DAIRY | Penta-Ocean Construction vs. BOVIS HOMES GROUP | Penta-Ocean Construction vs. American Homes 4 | Penta-Ocean Construction vs. Collins Foods Limited |
| KLA vs. COREBRIDGE FINANCIAL INC | KLA vs. CARSALESCOM | KLA vs. CODERE ONLINE LUX | KLA vs. SALESFORCE INC CDR |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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