Correlation Between Philip Morris and GAZTRTECHNIUADR15EO01

Can any of the company-specific risk be diversified away by investing in both Philip Morris and GAZTRTECHNIUADR15EO01 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 Philip Morris and GAZTRTECHNIUADR15EO01 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Philip Morris International and GAZTRTECHNIUADR15EO01, you can compare the effects of market volatilities on Philip Morris and GAZTRTECHNIUADR15EO01 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 Philip Morris with a short position of GAZTRTECHNIUADR15EO01. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philip Morris and GAZTRTECHNIUADR15EO01.

Diversification Opportunities for Philip Morris and GAZTRTECHNIUADR15EO01

0.56

Correlation Coefficient

Philip Morris  GAZTRTECHNIUADR15EO01

Very weak diversification

The 3 months correlation between Philip and GAZTRTECHNIUADR15EO01 is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Philip Morris International and GAZTRTECHNIUADR15EO01 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAZTRTECHNIUADR15EO01 and Philip Morris 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 Philip Morris International are associated (or correlated) with GAZTRTECHNIUADR15EO01. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAZTRTECHNIUADR15EO01 has no effect on the direction of Philip Morris i.e., Philip Morris and GAZTRTECHNIUADR15EO01 go up and down completely randomly.

Pair Corralation between Philip Morris and GAZTRTECHNIUADR15EO01

Assuming the 90 days horizon Philip Morris International is expected to generate 1.12 times more return on investment than GAZTRTECHNIUADR15EO01. However, Philip Morris is 1.12 times more volatile than GAZTRTECHNIUADR15EO01. It trades about 0.1 of its potential returns per unit of risk. GAZTRTECHNIUADR15EO01 is currently generating about 0.08 per unit of risk. If you would invest  10,730  in Philip Morris International on October 7, 2024 and sell it today you would earn a total of  1,128  from holding Philip Morris International or generate 10.51% return on investment over 90 days.

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

Philip Morris International  vs.  GAZTRTECHNIUADR15EO01

Philip Morris Intern

Risk-Adjusted Performance

8 of 100

OK

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

GAZTRTECHNIUADR15EO01

Risk-Adjusted Performance

6 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in GAZTRTECHNIUADR15EO01 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, GAZTRTECHNIUADR15EO01 may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Philip Morris and GAZTRTECHNIUADR15EO01

The main advantage of trading using opposite Philip Morris and GAZTRTECHNIUADR15EO01 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philip Morris position performs unexpectedly, GAZTRTECHNIUADR15EO01 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 GAZTRTECHNIUADR15EO01 will offset losses from the drop in GAZTRTECHNIUADR15EO01's long position.

The idea behind Philip Morris International and GAZTRTECHNIUADR15EO01 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.