Correlation Between Everland Investment and Pacific Petroleum

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

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

Diversification Opportunities for Everland Investment and Pacific Petroleum

-0.23

Correlation Coefficient

Everland Investment  Pacific Petroleum

Very good diversification

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

Pair Corralation between Everland Investment and Pacific Petroleum

Assuming the 90 days trading horizon Everland Investment JSC is expected to under-perform the Pacific Petroleum. In addition to that, Everland Investment is 1.44 times more volatile than Pacific Petroleum Transportation. It trades about -0.05 of its total potential returns per unit of risk. Pacific Petroleum Transportation is currently generating about 0.01 per unit of volatility. If you would invest  1,670,000  in Pacific Petroleum Transportation on October 11, 2024 and sell it today you would earn a total of  5,000  from holding Pacific Petroleum Transportation or generate 0.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	97.67%
Values	Daily Returns

Everland Investment JSC  vs.  Pacific Petroleum Transportati

Everland Investment JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pacific Petroleum

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Petroleum Transportation are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Pacific 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 Everland Investment and Pacific Petroleum

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

The idea behind Everland Investment JSC and Pacific Petroleum Transportation 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.