Correlation Between Corporate Office and Peninsula Energy

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Can any of the company-specific risk be diversified away by investing in both Corporate Office and Peninsula Energy 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 Corporate Office and Peninsula Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corporate Office Properties and Peninsula Energy Limited, you can compare the effects of market volatilities on Corporate Office and Peninsula Energy 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 Corporate Office with a short position of Peninsula Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corporate Office and Peninsula Energy.

Diversification Opportunities for Corporate Office and Peninsula Energy

CorporatePeninsulaDiversified AwayCorporatePeninsulaDiversified Away100%
-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Corporate and Peninsula is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Corporate Office Properties and Peninsula Energy Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peninsula Energy and Corporate Office 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 Corporate Office Properties are associated (or correlated) with Peninsula Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peninsula Energy has no effect on the direction of Corporate Office i.e., Corporate Office and Peninsula Energy go up and down completely randomly.

Pair Corralation between Corporate Office and Peninsula Energy

Assuming the 90 days horizon Corporate Office Properties is expected to generate 0.29 times more return on investment than Peninsula Energy. However, Corporate Office Properties is 3.4 times less risky than Peninsula Energy. It trades about -0.3 of its potential returns per unit of risk. Peninsula Energy Limited is currently generating about -0.27 per unit of risk. If you would invest  2,880  in Corporate Office Properties on November 18, 2024 and sell it today you would lose (300.00) from holding Corporate Office Properties or give up 10.42% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Corporate Office Properties  vs.  Peninsula Energy Limited

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb 01020304050
JavaScript chart by amCharts 3.21.15WX7 P1M
       Timeline  
Corporate Office Pro 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Corporate Office Properties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb262728293031
Peninsula Energy 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days Peninsula Energy Limited has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb0.60.650.70.750.80.850.9

Corporate Office and Peninsula Energy Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-2.57-1.95-1.33-0.71-0.0960.471.051.632.212.79 0.050.100.15
JavaScript chart by amCharts 3.21.15WX7 P1M
       Returns  

Pair Trading with Corporate Office and Peninsula Energy

The main advantage of trading using opposite Corporate Office and Peninsula Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corporate Office position performs unexpectedly, Peninsula Energy 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 Peninsula Energy will offset losses from the drop in Peninsula Energy's long position.
The idea behind Corporate Office Properties and Peninsula Energy Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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