Correlation Between Ba Ria and Materials Petroleum

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

By analyzing existing cross correlation between Ba Ria Thermal and Materials Petroleum JSC, you can compare the effects of market volatilities on Ba Ria and Materials 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 Ba Ria with a short position of Materials Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ba Ria and Materials Petroleum.

Diversification Opportunities for Ba Ria and Materials Petroleum

-0.49

Correlation Coefficient

Ba Ria  Materials Petroleum

Very good diversification

The 3 months correlation between BTP and Materials is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Ba Ria Thermal and Materials Petroleum JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Petroleum JSC and Ba Ria 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 Ba Ria Thermal are associated (or correlated) with Materials Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Petroleum JSC has no effect on the direction of Ba Ria i.e., Ba Ria and Materials Petroleum go up and down completely randomly.

Pair Corralation between Ba Ria and Materials Petroleum

Assuming the 90 days trading horizon Ba Ria Thermal is expected to generate 0.25 times more return on investment than Materials Petroleum. However, Ba Ria Thermal is 3.96 times less risky than Materials Petroleum. It trades about 0.18 of its potential returns per unit of risk. Materials Petroleum JSC is currently generating about -0.14 per unit of risk. If you would invest  1,170,000  in Ba Ria Thermal on October 11, 2024 and sell it today you would earn a total of  30,000  from holding Ba Ria Thermal or generate 2.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	50.0%
Values	Daily Returns

Ba Ria Thermal  vs.  Materials Petroleum JSC

Ba Ria Thermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ba Ria Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Materials Petroleum JSC

Risk-Adjusted Performance

0 of 100

Weak

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

Pair Trading with Ba Ria and Materials Petroleum

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

The idea behind Ba Ria Thermal and Materials Petroleum 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.