Correlation Between Westlake Chemical and Penta Ocean
Can any of the company-specific risk be diversified away by investing in both Westlake Chemical and Penta Ocean 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 Westlake Chemical and Penta Ocean into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Westlake Chemical and Penta Ocean Construction Co, you can compare the effects of market volatilities on Westlake Chemical and Penta Ocean 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 Westlake Chemical with a short position of Penta Ocean. Check out your portfolio center. Please also check ongoing floating volatility patterns of Westlake Chemical and Penta Ocean.
Diversification Opportunities for Westlake Chemical and Penta Ocean
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Westlake and Penta is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Westlake Chemical and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta Ocean Construc and Westlake Chemical 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 Westlake Chemical are associated (or correlated) with Penta Ocean. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Penta Ocean Construc has no effect on the direction of Westlake Chemical i.e., Westlake Chemical and Penta Ocean go up and down completely randomly.
Pair Corralation between Westlake Chemical and Penta Ocean
Assuming the 90 days horizon Westlake Chemical is expected to under-perform the Penta Ocean. In addition to that, Westlake Chemical is 1.02 times more volatile than Penta Ocean Construction Co. It trades about -0.16 of its total potential returns per unit of risk. Penta Ocean Construction Co is currently generating about -0.06 per unit of volatility. If you would invest 398.00 in Penta Ocean Construction Co on August 30, 2024 and sell it today you would lose (14.00) from holding Penta Ocean Construction Co or give up 3.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Westlake Chemical vs. Penta Ocean Construction Co
Performance |
| Timeline |
| Westlake Chemical |
| Penta Ocean Construc |
Westlake Chemical and Penta Ocean Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Westlake Chemical and Penta Ocean
The main advantage of trading using opposite Westlake Chemical and Penta Ocean positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Westlake Chemical position performs unexpectedly, Penta Ocean 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 Penta Ocean will offset losses from the drop in Penta Ocean's long position.| Westlake Chemical vs. Host Hotels Resorts | Westlake Chemical vs. BII Railway Transportation | Westlake Chemical vs. ANTA SPORTS PRODUCT | Westlake Chemical vs. Meli Hotels International |
| Penta Ocean vs. CARSALESCOM | Penta Ocean vs. American Homes 4 | Penta Ocean vs. RETAIL FOOD GROUP | Penta Ocean vs. Carsales |
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 CEOs Directory module to screen CEOs from public companies around the world.
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