Correlation Between Mari Petroleum and Loads

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

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

Diversification Opportunities for Mari Petroleum and Loads

-0.72

Correlation Coefficient

Mari Petroleum  Loads

Pay attention - limited upside

The 3 months correlation between Mari and Loads is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Loads in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Loads 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 Loads. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Loads has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Loads go up and down completely randomly.

Pair Corralation between Mari Petroleum and Loads

Assuming the 90 days trading horizon Mari Petroleum is expected to under-perform the Loads. But the stock apears to be less risky and, when comparing its historical volatility, Mari Petroleum is 1.09 times less risky than Loads. The stock trades about -0.01 of its potential returns per unit of risk. The Loads is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  1,525  in Loads on December 30, 2024 and sell it today you would earn a total of  241.00  from holding Loads or generate 15.8% return on investment over 90 days.

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

Mari Petroleum  vs.  Loads

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.

Loads

Risk-Adjusted Performance

Modest

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

Pair Trading with Mari Petroleum and Loads

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

The idea behind Mari Petroleum and Loads 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.

Check out your portfolio center.

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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.