Correlation Between Mari Petroleum and Grays Leasing

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

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

Diversification Opportunities for Mari Petroleum and Grays Leasing

0.59

Correlation Coefficient

Mari Petroleum  Grays Leasing

Very weak diversification

The 3 months correlation between Mari and Grays is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Grays Leasing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grays Leasing 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 Grays Leasing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grays Leasing has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Grays Leasing go up and down completely randomly.

Pair Corralation between Mari Petroleum and Grays Leasing

Assuming the 90 days trading horizon Mari Petroleum is expected to generate 1.06 times more return on investment than Grays Leasing. However, Mari Petroleum is 1.06 times more volatile than Grays Leasing. It trades about 0.08 of its potential returns per unit of risk. Grays Leasing is currently generating about -0.01 per unit of risk. If you would invest  46,459  in Mari Petroleum on December 2, 2024 and sell it today you would earn a total of  8,397  from holding Mari Petroleum or generate 18.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Mari Petroleum  vs.  Grays Leasing

Mari Petroleum

Risk-Adjusted Performance

Modest

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

Grays Leasing

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mari Petroleum and Grays Leasing

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

The idea behind Mari Petroleum and Grays Leasing 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.