Correlation Between Mari Petroleum and Gatron Industries

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

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

Diversification Opportunities for Mari Petroleum and Gatron Industries

0.31

Correlation Coefficient

Mari Petroleum  Gatron Industries

Weak diversification

The 3 months correlation between Mari and Gatron is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Gatron Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gatron Industries and Mari 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 Mari Petroleum are associated (or correlated) with Gatron Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gatron Industries has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Gatron Industries go up and down completely randomly.

Pair Corralation between Mari Petroleum and Gatron Industries

Assuming the 90 days trading horizon Mari Petroleum is expected to generate 1.81 times more return on investment than Gatron Industries. However, Mari Petroleum is 1.81 times more volatile than Gatron Industries. It trades about -0.01 of its potential returns per unit of risk. Gatron Industries is currently generating about -0.25 per unit of risk. If you would invest  71,882  in Mari Petroleum on December 30, 2024 and sell it today you would lose (3,466) from holding Mari Petroleum or give up 4.82% of portfolio value over 90 days.

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

Mari Petroleum  vs.  Gatron Industries

Mari Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mari Petroleum has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Mari Petroleum is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Gatron Industries

Risk-Adjusted Performance

Very Weak

Over the last 90 days Gatron Industries has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain somewhat strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Pair Trading with Mari Petroleum and Gatron Industries

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

The idea behind Mari Petroleum and Gatron Industries 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.