Correlation Between An Phat and Petrolimex Information

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

By analyzing existing cross correlation between An Phat Plastic and Petrolimex Information Technology, you can compare the effects of market volatilities on An Phat and Petrolimex Information 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 An Phat with a short position of Petrolimex Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of An Phat and Petrolimex Information.

Diversification Opportunities for An Phat and Petrolimex Information

0.15

Correlation Coefficient

An Phat  Petrolimex Information

Average diversification

The 3 months correlation between AAA and Petrolimex is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding An Phat Plastic and Petrolimex Information Technol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Information and An Phat 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 An Phat Plastic are associated (or correlated) with Petrolimex Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Information has no effect on the direction of An Phat i.e., An Phat and Petrolimex Information go up and down completely randomly.

Pair Corralation between An Phat and Petrolimex Information

Assuming the 90 days trading horizon An Phat Plastic is expected to under-perform the Petrolimex Information. But the stock apears to be less risky and, when comparing its historical volatility, An Phat Plastic is 2.23 times less risky than Petrolimex Information. The stock trades about -0.04 of its potential returns per unit of risk. The Petrolimex Information Technology is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  2,720,000  in Petrolimex Information Technology on December 30, 2024 and sell it today you would earn a total of  280,000  from holding Petrolimex Information Technology or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	51.67%
Values	Daily Returns

An Phat Plastic  vs.  Petrolimex Information Technol

An Phat Plastic

Risk-Adjusted Performance

Very Weak

Over the last 90 days An Phat Plastic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, An Phat is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Petrolimex Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Information Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrolimex Information displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with An Phat and Petrolimex Information

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

The idea behind An Phat Plastic and Petrolimex Information Technology 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 Correlations module to find global opportunities by holding instruments from different markets.