Correlation Between Penta Ocean and Snam SpA
Can any of the company-specific risk be diversified away by investing in both Penta Ocean and Snam SpA 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 Snam SpA 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 Snam SpA, you can compare the effects of market volatilities on Penta Ocean and Snam SpA 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 Snam SpA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and Snam SpA.
Diversification Opportunities for Penta Ocean and Snam SpA
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Penta and Snam is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and Snam SpA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Snam SpA 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 Snam SpA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Snam SpA has no effect on the direction of Penta Ocean i.e., Penta Ocean and Snam SpA go up and down completely randomly.
Pair Corralation between Penta Ocean and Snam SpA
Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 1.67 times more return on investment than Snam SpA. However, Penta Ocean is 1.67 times more volatile than Snam SpA. It trades about 0.07 of its potential returns per unit of risk. Snam SpA is currently generating about -0.07 per unit of risk. If you would invest 374.00 in Penta Ocean Construction Co on September 12, 2024 and sell it today you would earn a total of 22.00 from holding Penta Ocean Construction Co or generate 5.88% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 98.46% |
| Values | Daily Returns |
Penta Ocean Construction Co vs. Snam SpA
Performance |
| Timeline |
| Penta Ocean Construc |
| Snam SpA |
Penta Ocean and Snam SpA Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Penta Ocean and Snam SpA
The main advantage of trading using opposite Penta Ocean and Snam SpA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Penta Ocean position performs unexpectedly, Snam SpA 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 Snam SpA will offset losses from the drop in Snam SpA'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 |
| Snam SpA vs. COMPUTERSHARE | Snam SpA vs. Perdoceo Education | Snam SpA vs. Brockhaus Capital Management | Snam SpA vs. LANDSEA GREEN MANAGEMENT |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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