Correlation Between Penta Ocean and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both Penta Ocean and ETFS Coffee 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 ETFS Coffee 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 ETFS Coffee ETC, you can compare the effects of market volatilities on Penta Ocean and ETFS Coffee 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 ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and ETFS Coffee.
Diversification Opportunities for Penta Ocean and ETFS Coffee
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Penta and ETFS is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC 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 ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of Penta Ocean i.e., Penta Ocean and ETFS Coffee go up and down completely randomly.
Pair Corralation between Penta Ocean and ETFS Coffee
Assuming the 90 days horizon Penta Ocean is expected to generate 7.63 times less return on investment than ETFS Coffee. But when comparing it to its historical volatility, Penta Ocean Construction Co is 2.3 times less risky than ETFS Coffee. It trades about 0.1 of its potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 4,131 in ETFS Coffee ETC on September 13, 2024 and sell it today you would earn a total of 1,108 from holding ETFS Coffee ETC or generate 26.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Penta Ocean Construction Co vs. ETFS Coffee ETC
Performance |
| Timeline |
| Penta Ocean Construc |
| ETFS Coffee ETC |
Penta Ocean and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta Ocean and ETFS Coffee
The main advantage of trading using opposite Penta Ocean and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta Ocean position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee'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 |
| ETFS Coffee vs. BW OFFSHORE LTD | ETFS Coffee vs. AM EAGLE OUTFITTERS | ETFS Coffee vs. Ramsay Health Care | ETFS Coffee vs. ATRYS HEALTH SA |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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