Correlation Between Benakat Petroleum and Bank Mestika

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

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

Diversification Opportunities for Benakat Petroleum and Bank Mestika

0.06

Correlation Coefficient

Benakat Petroleum  Bank Mestika

Significant diversification

The 3 months correlation between Benakat and Bank is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Benakat Petroleum Energy and Bank Mestika Dharma in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bank Mestika Dharma and Benakat 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 Benakat Petroleum Energy are associated (or correlated) with Bank Mestika. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bank Mestika Dharma has no effect on the direction of Benakat Petroleum i.e., Benakat Petroleum and Bank Mestika go up and down completely randomly.

Pair Corralation between Benakat Petroleum and Bank Mestika

Assuming the 90 days trading horizon Benakat Petroleum Energy is expected to under-perform the Bank Mestika. In addition to that, Benakat Petroleum is 1.46 times more volatile than Bank Mestika Dharma. It trades about -0.06 of its total potential returns per unit of risk. Bank Mestika Dharma is currently generating about 0.02 per unit of volatility. If you would invest  193,000  in Bank Mestika Dharma on December 30, 2024 and sell it today you would earn a total of  1,500  from holding Bank Mestika Dharma or generate 0.78% return on investment over 90 days.

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

Benakat Petroleum Energy  vs.  Bank Mestika Dharma

Benakat Petroleum Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Benakat Petroleum Energy has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting performance, the Stock's forward-looking signals remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Bank Mestika Dharma

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bank Mestika Dharma are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent forward-looking signals, Bank Mestika is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Benakat Petroleum and Bank Mestika

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

The idea behind Benakat Petroleum Energy and Bank Mestika Dharma 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.