Correlation Between Brooge Holdings and Marine Petroleum

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

By analyzing existing cross correlation between Brooge Holdings and Marine Petroleum Trust, you can compare the effects of market volatilities on Brooge Holdings and Marine Petroleum 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 Brooge Holdings with a short position of Marine Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brooge Holdings and Marine Petroleum.

Diversification Opportunities for Brooge Holdings and Marine Petroleum

0.23

Correlation Coefficient

Brooge Holdings  Marine Petroleum

Modest diversification

The 3 months correlation between Brooge and Marine is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Brooge Holdings and Marine Petroleum Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Marine Petroleum Trust and Brooge Holdings 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 Brooge Holdings are associated (or correlated) with Marine Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Marine Petroleum Trust has no effect on the direction of Brooge Holdings i.e., Brooge Holdings and Marine Petroleum go up and down completely randomly.

Pair Corralation between Brooge Holdings and Marine Petroleum

Given the investment horizon of 90 days Brooge Holdings is expected to generate 3.44 times more return on investment than Marine Petroleum. However, Brooge Holdings is 3.44 times more volatile than Marine Petroleum Trust. It trades about 0.08 of its potential returns per unit of risk. Marine Petroleum Trust is currently generating about 0.0 per unit of risk. If you would invest  138.00  in Brooge Holdings on September 16, 2024 and sell it today you would earn a total of  30.00  from holding Brooge Holdings or generate 21.74% return on investment over 90 days.

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

Brooge Holdings  vs.  Marine Petroleum Trust

Brooge Holdings

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Brooge Holdings are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Brooge Holdings reported solid returns over the last few months and may actually be approaching a breakup point.

Marine Petroleum Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Petroleum Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Marine Petroleum 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 Brooge Holdings and Marine Petroleum

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

The idea behind Brooge Holdings and Marine Petroleum Trust 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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.