Correlation Between CVR Energy and PCI PAL

Can any of the company-specific risk be diversified away by investing in both CVR Energy and PCI PAL 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 CVR Energy and PCI PAL into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CVR Energy and PCI PAL PLC, you can compare the effects of market volatilities on CVR Energy and PCI PAL 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 CVR Energy with a short position of PCI PAL. Check out your portfolio center. Please also check ongoing floating volatility patterns of CVR Energy and PCI PAL.

Diversification Opportunities for CVR Energy and PCI PAL

0.44

Correlation Coefficient

CVR Energy  PCI PAL

Very weak diversification

The 3 months correlation between CVR and PCI is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding CVR Energy and PCI PAL PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PCI PAL PLC and CVR Energy 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 CVR Energy are associated (or correlated) with PCI PAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PCI PAL PLC has no effect on the direction of CVR Energy i.e., CVR Energy and PCI PAL go up and down completely randomly.

Pair Corralation between CVR Energy and PCI PAL

Assuming the 90 days trading horizon CVR Energy is expected to generate 1.51 times more return on investment than PCI PAL. However, CVR Energy is 1.51 times more volatile than PCI PAL PLC. It trades about 0.28 of its potential returns per unit of risk. PCI PAL PLC is currently generating about 0.0 per unit of risk. If you would invest  1,883  in CVR Energy on April 20, 2025 and sell it today you would earn a total of  1,010  from holding CVR Energy or generate 53.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	93.65%
Values	Daily Returns

CVR Energy  vs.  PCI PAL PLC

CVR Energy

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CVR Energy are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, CVR Energy unveiled solid returns over the last few months and may actually be approaching a breakup point.

PCI PAL PLC

Risk-Adjusted Performance

Very Weak

Over the last 90 days PCI PAL PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, PCI PAL is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with CVR Energy and PCI PAL

The main advantage of trading using opposite CVR Energy and PCI PAL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CVR Energy position performs unexpectedly, PCI PAL 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 PCI PAL will offset losses from the drop in PCI PAL's long position.

The idea behind CVR Energy and PCI PAL PLC 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.