Correlation Between Oil Terminal and Alro Slatina

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

By analyzing existing cross correlation between Oil Terminal C and Alro Slatina, you can compare the effects of market volatilities on Oil Terminal and Alro Slatina 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 Oil Terminal with a short position of Alro Slatina. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Terminal and Alro Slatina.

Diversification Opportunities for Oil Terminal and Alro Slatina

0.01

Correlation Coefficient

Oil Terminal  Alro Slatina

Significant diversification

The 3 months correlation between Oil and Alro is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Oil Terminal C and Alro Slatina in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alro Slatina and Oil Terminal 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 Oil Terminal C are associated (or correlated) with Alro Slatina. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alro Slatina has no effect on the direction of Oil Terminal i.e., Oil Terminal and Alro Slatina go up and down completely randomly.

Pair Corralation between Oil Terminal and Alro Slatina

Assuming the 90 days trading horizon Oil Terminal C is expected to generate 1.52 times more return on investment than Alro Slatina. However, Oil Terminal is 1.52 times more volatile than Alro Slatina. It trades about 0.01 of its potential returns per unit of risk. Alro Slatina is currently generating about 0.02 per unit of risk. If you would invest  12.00  in Oil Terminal C on December 27, 2024 and sell it today you would earn a total of  0.00  from holding Oil Terminal C or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Oil Terminal C  vs.  Alro Slatina

Oil Terminal C

Risk-Adjusted Performance

Weak

Over the last 90 days Oil Terminal C has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Oil Terminal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Alro Slatina

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Alro Slatina are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Alro Slatina is not utilizing all of its potentials. The latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Oil Terminal and Alro Slatina

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

The idea behind Oil Terminal C and Alro Slatina 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.