Correlation Between Marine Petroleum and Brooge Holdings

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

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

Diversification Opportunities for Marine Petroleum and Brooge Holdings

0.27

Correlation Coefficient

Marine Petroleum  Brooge Holdings

Modest diversification

The 3 months correlation between Marine and Brooge is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Marine Petroleum Trust and Brooge Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brooge Holdings and Marine 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 Marine Petroleum Trust are associated (or correlated) with Brooge Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brooge Holdings has no effect on the direction of Marine Petroleum i.e., Marine Petroleum and Brooge Holdings go up and down completely randomly.

Pair Corralation between Marine Petroleum and Brooge Holdings

Assuming the 90 days horizon Marine Petroleum Trust is expected to generate 0.55 times more return on investment than Brooge Holdings. However, Marine Petroleum Trust is 1.81 times less risky than Brooge Holdings. It trades about -0.02 of its potential returns per unit of risk. Brooge Holdings is currently generating about -0.02 per unit of risk. If you would invest  623.00  in Marine Petroleum Trust on October 5, 2024 and sell it today you would lose (229.00) from holding Marine Petroleum Trust or give up 36.76% of portfolio value over 90 days.

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

Marine Petroleum Trust  vs.  Brooge Holdings

Marine Petroleum Trust

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Marine Petroleum Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Brooge Holdings

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Brooge Holdings are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Brooge Holdings may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Marine Petroleum and Brooge Holdings

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

The idea behind Marine Petroleum Trust and Brooge Holdings 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.