Correlation Between Oil Terminal and Farmaceutica

Can any of the company-specific risk be diversified away by investing in both Oil Terminal and Farmaceutica 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 Farmaceutica 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 Farmaceutica R, you can compare the effects of market volatilities on Oil Terminal and Farmaceutica 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 Farmaceutica. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Terminal and Farmaceutica.

Diversification Opportunities for Oil Terminal and Farmaceutica

0.0

Correlation Coefficient

Oil Terminal  Farmaceutica

Pay attention - limited upside

The 3 months correlation between Oil and Farmaceutica is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Oil Terminal C and Farmaceutica R in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Farmaceutica R 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 Farmaceutica. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Farmaceutica R has no effect on the direction of Oil Terminal i.e., Oil Terminal and Farmaceutica go up and down completely randomly.

Pair Corralation between Oil Terminal and Farmaceutica

If you would invest  13.00  in Oil Terminal C on October 15, 2024 and sell it today you would lose (1.00) from holding Oil Terminal C or give up 7.69% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.2%
Values	Daily Returns

Oil Terminal C  vs.  Farmaceutica R

Oil Terminal C

Risk-Adjusted Performance

0 of 100

Very 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 latest stock price disarray, may contribute to short-term losses for the investors.

Farmaceutica R

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Oil Terminal and Farmaceutica

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

The idea behind Oil Terminal C and Farmaceutica R 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.