Correlation Between Petro Usa and American Leisure

Can any of the company-specific risk be diversified away by investing in both Petro Usa and American Leisure 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 Petro Usa and American Leisure into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Petro Usa and American Leisure

0.0

Correlation Coefficient

Petro Usa  American Leisure

Pay attention - limited upside

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

Pair Corralation between Petro Usa and American Leisure

Given the investment horizon of 90 days Petro Usa is expected to generate 1.47 times less return on investment than American Leisure. In addition to that, Petro Usa is 1.48 times more volatile than American Leisure Holdings. It trades about 0.07 of its total potential returns per unit of risk. American Leisure Holdings is currently generating about 0.15 per unit of volatility. If you would invest  0.03  in American Leisure Holdings on October 5, 2024 and sell it today you would lose (0.02) from holding American Leisure Holdings or give up 66.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Petro Usa  vs.  American Leisure Holdings

Petro Usa

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petro Usa has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively steady basic indicators, Petro Usa is not utilizing all of its potentials. The latest stock price chaos, may contribute to medium-term losses for the stakeholders.

American Leisure Holdings

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Leisure Holdings are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. Despite fairly weak essential indicators, American Leisure demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petro Usa and American Leisure

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

The idea behind Petro Usa and American Leisure 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.

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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.