Correlation Between Cathedral Energy and Permex Petroleum

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

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

Diversification Opportunities for Cathedral Energy and Permex Petroleum

0.35

Correlation Coefficient

Cathedral Energy  Permex Petroleum

Weak diversification

The 3 months correlation between Cathedral and Permex is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Cathedral Energy Services and Permex Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permex Petroleum and Cathedral 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 Cathedral Energy Services are associated (or correlated) with Permex Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permex Petroleum has no effect on the direction of Cathedral Energy i.e., Cathedral Energy and Permex Petroleum go up and down completely randomly.

Pair Corralation between Cathedral Energy and Permex Petroleum

Assuming the 90 days horizon Cathedral Energy Services is expected to under-perform the Permex Petroleum. But the pink sheet apears to be less risky and, when comparing its historical volatility, Cathedral Energy Services is 7.37 times less risky than Permex Petroleum. The pink sheet trades about -0.05 of its potential returns per unit of risk. The Permex Petroleum is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  220.00  in Permex Petroleum on May 7, 2025 and sell it today you would earn a total of  180.00  from holding Permex Petroleum or generate 81.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Cathedral Energy Services  vs.  Permex Petroleum

Cathedral Energy Services

Risk-Adjusted Performance

Very Weak

Over the last 90 days Cathedral Energy Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Permex Petroleum

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Permex Petroleum are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite nearly conflicting fundamental indicators, Permex Petroleum reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cathedral Energy and Permex Petroleum

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

The idea behind Cathedral Energy Services and Permex Petroleum 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.

Check out your portfolio center.

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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.