Correlation Between Permex Petroleum and Cathedral Energy

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

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

Diversification Opportunities for Permex Petroleum and Cathedral Energy

0.38

Correlation Coefficient

Permex Petroleum  Cathedral Energy

Weak diversification

The 3 months correlation between Permex and Cathedral is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Permex Petroleum and Cathedral Energy Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cathedral Energy Services and Permex Petroleum 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 Permex Petroleum are associated (or correlated) with Cathedral Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cathedral Energy Services has no effect on the direction of Permex Petroleum i.e., Permex Petroleum and Cathedral Energy go up and down completely randomly.

Pair Corralation between Permex Petroleum and Cathedral Energy

Assuming the 90 days horizon Permex Petroleum is expected to generate 7.37 times more return on investment than Cathedral Energy. However, Permex Petroleum is 7.37 times more volatile than Cathedral Energy Services. It trades about 0.12 of its potential returns per unit of risk. Cathedral Energy Services is currently generating about -0.05 per unit of risk. If you would invest  220.00  in Permex Petroleum on May 6, 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	98.41%
Values	Daily Returns

Permex Petroleum  vs.  Cathedral Energy Services

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 fragile fundamental indicators, Permex Petroleum reported solid returns over the last few months and may actually be approaching a breakup point.

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 weak 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.

Pair Trading with Permex Petroleum and Cathedral Energy

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

The idea behind Permex Petroleum and Cathedral Energy Services 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.