Correlation Between Petrolimex Insurance and An Phat

Can any of the company-specific risk be diversified away by investing in both Petrolimex Insurance and An Phat 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 Petrolimex Insurance and An Phat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petrolimex Insurance Corp and An Phat Plastic, you can compare the effects of market volatilities on Petrolimex Insurance and An Phat 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 Petrolimex Insurance with a short position of An Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Insurance and An Phat.

Diversification Opportunities for Petrolimex Insurance and An Phat

0.08

Correlation Coefficient

Petrolimex Insurance  An Phat

Significant diversification

The 3 months correlation between Petrolimex and AAA is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Insurance Corp and An Phat Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Phat Plastic and Petrolimex Insurance 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 Petrolimex Insurance Corp are associated (or correlated) with An Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Phat Plastic has no effect on the direction of Petrolimex Insurance i.e., Petrolimex Insurance and An Phat go up and down completely randomly.

Pair Corralation between Petrolimex Insurance and An Phat

Assuming the 90 days trading horizon Petrolimex Insurance Corp is expected to generate 1.32 times more return on investment than An Phat. However, Petrolimex Insurance is 1.32 times more volatile than An Phat Plastic. It trades about 0.01 of its potential returns per unit of risk. An Phat Plastic is currently generating about 0.01 per unit of risk. If you would invest  2,429,119  in Petrolimex Insurance Corp on December 2, 2024 and sell it today you would lose (89,119) from holding Petrolimex Insurance Corp or give up 3.67% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	68.56%
Values	Daily Returns

Petrolimex Insurance Corp  vs.  An Phat Plastic

Petrolimex Insurance Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Insurance Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very inconsistent forward indicators, Petrolimex Insurance displayed solid returns over the last few months and may actually be approaching a breakup point.

An Phat Plastic

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in An Phat Plastic are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, An Phat is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Petrolimex Insurance and An Phat

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

The idea behind Petrolimex Insurance Corp and An Phat Plastic 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.