Correlation Between Penta Ocean and General Dynamics

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

Diversification Opportunities for Penta Ocean and General Dynamics

0.53

Correlation Coefficient

Penta Ocean  General Dynamics

Very weak diversification

The 3 months correlation between Penta and General is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Penta Ocean Construction Co and General Dynamics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Dynamics 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 General Dynamics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Dynamics has no effect on the direction of Penta Ocean i.e., Penta Ocean and General Dynamics go up and down completely randomly.

Pair Corralation between Penta Ocean and General Dynamics

Assuming the 90 days horizon Penta Ocean Construction Co is expected to generate 1.48 times more return on investment than General Dynamics. However, Penta Ocean is 1.48 times more volatile than General Dynamics. It trades about 0.1 of its potential returns per unit of risk. General Dynamics is currently generating about 0.1 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	Weak
Accuracy	98.44%
Values	Daily Returns

Penta Ocean Construction Co  vs.  General Dynamics

Penta Ocean Construc

Risk-Adjusted Performance

Insignificant

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.

General Dynamics

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Dynamics are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, General Dynamics may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Penta Ocean and General Dynamics

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

The idea behind Penta Ocean Construction Co and General Dynamics 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.