Correlation Between Mari Petroleum and JS Investments

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

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

Diversification Opportunities for Mari Petroleum and JS Investments

0.51

Correlation Coefficient

Mari Petroleum  JS Investments

Very weak diversification

The 3 months correlation between Mari and JSIL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and JS Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JS Investments 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 JS Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JS Investments has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and JS Investments go up and down completely randomly.

Pair Corralation between Mari Petroleum and JS Investments

Assuming the 90 days trading horizon Mari Petroleum is expected to generate 1.04 times more return on investment than JS Investments. However, Mari Petroleum is 1.04 times more volatile than JS Investments. It trades about 0.13 of its potential returns per unit of risk. JS Investments is currently generating about 0.05 per unit of risk. If you would invest  6,765  in Mari Petroleum on December 4, 2024 and sell it today you would earn a total of  47,435  from holding Mari Petroleum or generate 701.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	69.57%
Values	Daily Returns

Mari Petroleum  vs.  JS Investments

Mari Petroleum

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Mari Petroleum are ranked lower than 3 (%) 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.

JS Investments

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mari Petroleum and JS Investments

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

The idea behind Mari Petroleum and JS Investments 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.