Correlation Between Petrolimex Insurance and Everland Investment

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

Diversification Opportunities for Petrolimex Insurance and Everland Investment

0.69

Correlation Coefficient

Petrolimex Insurance  Everland Investment

Poor diversification

The 3 months correlation between Petrolimex and Everland is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Insurance Corp and Everland Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Everland Investment JSC 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 Everland Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Everland Investment JSC has no effect on the direction of Petrolimex Insurance i.e., Petrolimex Insurance and Everland Investment go up and down completely randomly.

Pair Corralation between Petrolimex Insurance and Everland Investment

Assuming the 90 days trading horizon Petrolimex Insurance Corp is expected to generate 0.85 times more return on investment than Everland Investment. However, Petrolimex Insurance Corp is 1.18 times less risky than Everland Investment. It trades about -0.04 of its potential returns per unit of risk. Everland Investment JSC is currently generating about -0.05 per unit of risk. If you would invest  2,375,000  in Petrolimex Insurance Corp on September 14, 2024 and sell it today you would lose (95,000) from holding Petrolimex Insurance Corp or give up 4.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	82.81%
Values	Daily Returns

Petrolimex Insurance Corp  vs.  Everland Investment JSC

Petrolimex Insurance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Everland Investment JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Everland Investment JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Petrolimex Insurance and Everland Investment

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

The idea behind Petrolimex Insurance Corp and Everland Investment JSC 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.