Correlation Between APG Securities and Petrolimex Petrochemical

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

By analyzing existing cross correlation between APG Securities Joint and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on APG Securities and Petrolimex Petrochemical 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 APG Securities with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of APG Securities and Petrolimex Petrochemical.

Diversification Opportunities for APG Securities and Petrolimex Petrochemical

-0.08

Correlation Coefficient

APG Securities  Petrolimex Petrochemical

Good diversification

The 3 months correlation between APG and Petrolimex is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding APG Securities Joint and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and APG Securities 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 APG Securities Joint are associated (or correlated) with Petrolimex Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Petrochemical has no effect on the direction of APG Securities i.e., APG Securities and Petrolimex Petrochemical go up and down completely randomly.

Pair Corralation between APG Securities and Petrolimex Petrochemical

Assuming the 90 days trading horizon APG Securities Joint is expected to generate 2.0 times more return on investment than Petrolimex Petrochemical. However, APG Securities is 2.0 times more volatile than Petrolimex Petrochemical JSC. It trades about 0.43 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.17 per unit of risk. If you would invest  698,000  in APG Securities Joint on December 5, 2024 and sell it today you would earn a total of  206,000  from holding APG Securities Joint or generate 29.51% return on investment over 90 days.

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

APG Securities Joint  vs.  Petrolimex Petrochemical JSC

APG Securities Joint

Risk-Adjusted Performance

Weak

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

Petrolimex Petrochemical

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Petrochemical JSC are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Petrolimex Petrochemical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with APG Securities and Petrolimex Petrochemical

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

The idea behind APG Securities Joint and Petrolimex Petrochemical JSC 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.