Correlation Between First Colombia and Petro Usa

Can any of the company-specific risk be diversified away by investing in both First Colombia and Petro Usa 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 First Colombia and Petro Usa into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between First Colombia Gold and Petro Usa, you can compare the effects of market volatilities on First Colombia and Petro Usa 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 First Colombia with a short position of Petro Usa. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Colombia and Petro Usa.

Diversification Opportunities for First Colombia and Petro Usa

0.0

Correlation Coefficient

First Colombia  Petro Usa

Pay attention - limited upside

The 3 months correlation between First and Petro is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding First Colombia Gold and Petro Usa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petro Usa and First Colombia 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 First Colombia Gold are associated (or correlated) with Petro Usa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petro Usa has no effect on the direction of First Colombia i.e., First Colombia and Petro Usa go up and down completely randomly.

Pair Corralation between First Colombia and Petro Usa

Given the investment horizon of 90 days First Colombia Gold is expected to generate 10.33 times more return on investment than Petro Usa. However, First Colombia is 10.33 times more volatile than Petro Usa. It trades about 0.21 of its potential returns per unit of risk. Petro Usa is currently generating about 0.08 per unit of risk. If you would invest  0.03  in First Colombia Gold on September 26, 2024 and sell it today you would lose (0.03) from holding First Colombia Gold or give up 100.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	97.44%
Values	Daily Returns

First Colombia Gold  vs.  Petro Usa

First Colombia Gold

Risk-Adjusted Performance

19 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in First Colombia Gold are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of rather inconsistent technical and fundamental indicators, First Colombia exhibited solid returns over the last few months and may actually be approaching a breakup point.

Petro Usa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petro Usa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Petro Usa is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

Pair Trading with First Colombia and Petro Usa

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

The idea behind First Colombia Gold and Petro Usa 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.