Correlation Between Penta Ocean and AIR PRODCHEMICALS

Can any of the company-specific risk be diversified away by investing in both Penta Ocean and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS 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 AIR PRODCHEMICALS, you can compare the effects of market volatilities on Penta Ocean and AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Penta Ocean and AIR PRODCHEMICALS.

Diversification Opportunities for Penta Ocean and AIR PRODCHEMICALS

0.71

Correlation Coefficient

Penta Ocean  AIR PRODCHEMICALS

Poor diversification

The 3 months correlation between Penta and AIR is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and AIR PRODCHEMICALS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AIR PRODCHEMICALS 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 AIR PRODCHEMICALS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AIR PRODCHEMICALS has no effect on the direction of Penta Ocean i.e., Penta Ocean and AIR PRODCHEMICALS go up and down completely randomly.

Pair Corralation between Penta Ocean and AIR PRODCHEMICALS

Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 1.57 times more return on investment than AIR PRODCHEMICALS. However, Penta Ocean is 1.57 times more volatile than AIR PRODCHEMICALS. It trades about 0.1 of its potential returns per unit of risk. AIR PRODCHEMICALS is currently generating about 0.12 per unit of risk. If you would invest  484.00  in Penta Ocean Construction Co on April 24, 2025 and sell it today you would earn a total of  51.00  from holding Penta Ocean Construction Co or generate 10.54% return on investment over 90 days.

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

Penta Ocean Construction Co  vs.  AIR PRODCHEMICALS

Penta Ocean Construc

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Penta Ocean Construction Co are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Penta Ocean may actually be approaching a critical reversion point that can send shares even higher in August 2025.

AIR PRODCHEMICALS

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in AIR PRODCHEMICALS are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, AIR PRODCHEMICALS may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Penta Ocean and AIR PRODCHEMICALS

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

The idea behind Penta Ocean Construction Co and AIR PRODCHEMICALS 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.