Correlation Between Mari Petroleum and Oil
Can any of the company-specific risk be diversified away by investing in both Mari Petroleum and Oil 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 Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mari Petroleum and Oil and Gas, you can compare the effects of market volatilities on Mari Petroleum and Oil 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 Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mari Petroleum and Oil.
Diversification Opportunities for Mari Petroleum and Oil
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Mari and Oil is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Mari Petroleum and Oil and Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil and Gas 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 Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil and Gas has no effect on the direction of Mari Petroleum i.e., Mari Petroleum and Oil go up and down completely randomly.
Pair Corralation between Mari Petroleum and Oil
Assuming the 90 days trading horizon Mari Petroleum is expected to generate 3.31 times more return on investment than Oil. However, Mari Petroleum is 3.31 times more volatile than Oil and Gas. It trades about 0.24 of its potential returns per unit of risk. Oil and Gas is currently generating about 0.28 per unit of risk. If you would invest 24,554 in Mari Petroleum on September 12, 2024 and sell it today you would earn a total of 41,711 from holding Mari Petroleum or generate 169.87% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Mari Petroleum vs. Oil and Gas
Performance |
Timeline |
Mari Petroleum |
Oil and Gas |
Mari Petroleum and Oil Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Mari Petroleum and Oil
The main advantage of trading using opposite Mari Petroleum and Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mari Petroleum position performs unexpectedly, Oil 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 Oil will offset losses from the drop in Oil's long position.Mari Petroleum vs. Oil and Gas | Mari Petroleum vs. Pakistan State Oil | Mari Petroleum vs. Pakistan Petroleum | Mari Petroleum vs. Fauji Fertilizer |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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