Correlation Between Oil Natural and POWERGRID Infrastructure

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

By analyzing existing cross correlation between Oil Natural Gas and POWERGRID Infrastructure Investment, you can compare the effects of market volatilities on Oil Natural and POWERGRID Infrastructure 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 Natural with a short position of POWERGRID Infrastructure. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Natural and POWERGRID Infrastructure.

Diversification Opportunities for Oil Natural and POWERGRID Infrastructure

0.43

Correlation Coefficient

Oil Natural  POWERGRID Infrastructure

Very weak diversification

The 3 months correlation between Oil and POWERGRID is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and POWERGRID Infrastructure Inves in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POWERGRID Infrastructure and Oil Natural 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 Natural Gas are associated (or correlated) with POWERGRID Infrastructure. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POWERGRID Infrastructure has no effect on the direction of Oil Natural i.e., Oil Natural and POWERGRID Infrastructure go up and down completely randomly.

Pair Corralation between Oil Natural and POWERGRID Infrastructure

Assuming the 90 days trading horizon Oil Natural Gas is expected to under-perform the POWERGRID Infrastructure. In addition to that, Oil Natural is 2.23 times more volatile than POWERGRID Infrastructure Investment. It trades about -0.12 of its total potential returns per unit of risk. POWERGRID Infrastructure Investment is currently generating about -0.11 per unit of volatility. If you would invest  9,108  in POWERGRID Infrastructure Investment on September 12, 2024 and sell it today you would lose (388.00) from holding POWERGRID Infrastructure Investment or give up 4.26% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.39%
Values	Daily Returns

Oil Natural Gas  vs.  POWERGRID Infrastructure Inves

Oil Natural Gas

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Natural Gas has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting 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.

POWERGRID Infrastructure

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days POWERGRID Infrastructure Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, POWERGRID Infrastructure is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Oil Natural and POWERGRID Infrastructure

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

The idea behind Oil Natural Gas and POWERGRID Infrastructure Investment 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.