Correlation Between Motor Oil and Vogiatzoglou Systems

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

By analyzing existing cross correlation between Motor Oil Corinth and Vogiatzoglou Systems SA, you can compare the effects of market volatilities on Motor Oil and Vogiatzoglou Systems 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 Motor Oil with a short position of Vogiatzoglou Systems. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motor Oil and Vogiatzoglou Systems.

Diversification Opportunities for Motor Oil and Vogiatzoglou Systems

0.69

Correlation Coefficient

Motor Oil  Vogiatzoglou Systems

Poor diversification

The 3 months correlation between Motor and Vogiatzoglou is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Motor Oil Corinth and Vogiatzoglou Systems SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vogiatzoglou Systems and Motor Oil 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 Motor Oil Corinth are associated (or correlated) with Vogiatzoglou Systems. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vogiatzoglou Systems has no effect on the direction of Motor Oil i.e., Motor Oil and Vogiatzoglou Systems go up and down completely randomly.

Pair Corralation between Motor Oil and Vogiatzoglou Systems

Assuming the 90 days trading horizon Motor Oil is expected to generate 1.24 times less return on investment than Vogiatzoglou Systems. But when comparing it to its historical volatility, Motor Oil Corinth is 1.59 times less risky than Vogiatzoglou Systems. It trades about 0.05 of its potential returns per unit of risk. Vogiatzoglou Systems SA is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  216.00  in Vogiatzoglou Systems SA on October 9, 2024 and sell it today you would earn a total of  8.00  from holding Vogiatzoglou Systems SA or generate 3.7% return on investment over 90 days.

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

Motor Oil Corinth  vs.  Vogiatzoglou Systems SA

Motor Oil Corinth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Motor Oil Corinth are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical indicators, Motor Oil is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Vogiatzoglou Systems

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vogiatzoglou Systems SA are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Vogiatzoglou Systems is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Motor Oil and Vogiatzoglou Systems

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

The idea behind Motor Oil Corinth and Vogiatzoglou Systems SA 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.