Correlation Between Torm PLC and PAMT P

Can any of the company-specific risk be diversified away by investing in both Torm PLC and PAMT P 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 Torm PLC and PAMT P into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Torm PLC Class and PAMT P, you can compare the effects of market volatilities on Torm PLC and PAMT P 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 Torm PLC with a short position of PAMT P. Check out your portfolio center. Please also check ongoing floating volatility patterns of Torm PLC and PAMT P.

Diversification Opportunities for Torm PLC and PAMT P

-0.21

Correlation Coefficient

Torm PLC  PAMT P

Very good diversification

The 3 months correlation between Torm and PAMT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Torm PLC Class and PAMT P in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PAMT P and Torm PLC 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 Torm PLC Class are associated (or correlated) with PAMT P. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PAMT P has no effect on the direction of Torm PLC i.e., Torm PLC and PAMT P go up and down completely randomly.

Pair Corralation between Torm PLC and PAMT P

Given the investment horizon of 90 days Torm PLC Class is expected to generate 0.69 times more return on investment than PAMT P. However, Torm PLC Class is 1.45 times less risky than PAMT P. It trades about 0.12 of its potential returns per unit of risk. PAMT P is currently generating about -0.01 per unit of risk. If you would invest  1,519  in Torm PLC Class on April 21, 2025 and sell it today you would earn a total of  245.00  from holding Torm PLC Class or generate 16.13% return on investment over 90 days.

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

Torm PLC Class  vs.  PAMT P

Torm PLC Class

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Torm PLC Class are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak primary indicators, Torm PLC exhibited solid returns over the last few months and may actually be approaching a breakup point.

PAMT P

Risk-Adjusted Performance

Very Weak

Over the last 90 days PAMT P has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable primary indicators, PAMT P is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Torm PLC and PAMT P

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

The idea behind Torm PLC Class and PAMT P 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.