Correlation Between CENTURIA OFFICE and Penta-Ocean Construction

Can any of the company-specific risk be diversified away by investing in both CENTURIA OFFICE and Penta-Ocean Construction 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 CENTURIA OFFICE and Penta-Ocean Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CENTURIA OFFICE REIT and Penta Ocean Construction Co, you can compare the effects of market volatilities on CENTURIA OFFICE and Penta-Ocean Construction 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 CENTURIA OFFICE with a short position of Penta-Ocean Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of CENTURIA OFFICE and Penta-Ocean Construction.

Diversification Opportunities for CENTURIA OFFICE and Penta-Ocean Construction

0.61

Correlation Coefficient

CENTURIA OFFICE  Penta-Ocean Construction

Poor diversification

The 3 months correlation between CENTURIA and Penta-Ocean is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding CENTURIA OFFICE REIT and Penta Ocean Construction Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Penta-Ocean Construction and CENTURIA 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 CENTURIA OFFICE REIT are associated (or correlated) with Penta-Ocean Construction. 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 Construction has no effect on the direction of CENTURIA OFFICE i.e., CENTURIA OFFICE and Penta-Ocean Construction go up and down completely randomly.

Pair Corralation between CENTURIA OFFICE and Penta-Ocean Construction

Assuming the 90 days horizon CENTURIA OFFICE REIT is expected to under-perform the Penta-Ocean Construction. But the stock apears to be less risky and, when comparing its historical volatility, CENTURIA OFFICE REIT is 1.1 times less risky than Penta-Ocean Construction. The stock trades about -0.01 of its potential returns per unit of risk. The Penta Ocean Construction Co is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  432.00  in Penta Ocean Construction Co on April 3, 2025 and sell it today you would earn a total of  93.00  from holding Penta Ocean Construction Co or generate 21.53% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CENTURIA OFFICE REIT  vs.  Penta Ocean Construction Co

CENTURIA OFFICE REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days CENTURIA OFFICE REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, CENTURIA OFFICE is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Penta-Ocean Construction

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Penta-Ocean Construction reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CENTURIA OFFICE and Penta-Ocean Construction

The main advantage of trading using opposite CENTURIA OFFICE and Penta-Ocean Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CENTURIA OFFICE position performs unexpectedly, Penta-Ocean Construction 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 Construction will offset losses from the drop in Penta-Ocean Construction's long position.

The idea behind CENTURIA OFFICE REIT and Penta Ocean Construction Co 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.