Correlation Between Petrolimex Information and An Phat

Can any of the company-specific risk be diversified away by investing in both Petrolimex Information 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 Information 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 Information Technology and An Phat Plastic, you can compare the effects of market volatilities on Petrolimex Information 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 Information with a short position of An Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Information and An Phat.

Diversification Opportunities for Petrolimex Information and An Phat

0.15

Correlation Coefficient

Petrolimex Information  An Phat

Average diversification

The 3 months correlation between Petrolimex and AAA is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol 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 Information 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 Information Technology 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 Information i.e., Petrolimex Information and An Phat go up and down completely randomly.

Pair Corralation between Petrolimex Information and An Phat

Assuming the 90 days trading horizon Petrolimex Information Technology is expected to generate 2.23 times more return on investment than An Phat. However, Petrolimex Information is 2.23 times more volatile than An Phat Plastic. It trades about 0.14 of its potential returns per unit of risk. An Phat Plastic is currently generating about -0.04 per unit of risk. If you would invest  2,720,000  in Petrolimex Information Technology on December 30, 2024 and sell it today you would earn a total of  280,000  from holding Petrolimex Information Technology or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	51.67%
Values	Daily Returns

Petrolimex Information Technol  vs.  An Phat Plastic

Petrolimex Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Information Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrolimex Information displayed solid returns over the last few months and may actually be approaching a breakup point.

An Phat Plastic

Risk-Adjusted Performance

Very Weak

Over the last 90 days An Phat Plastic has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Information and An Phat

The main advantage of trading using opposite Petrolimex Information and An Phat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex Information 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 Information Technology 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.