Correlation Between Petrolimex Information and Industrial Urban

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

Diversification Opportunities for Petrolimex Information and Industrial Urban

0.59

Correlation Coefficient

Petrolimex Information  Industrial Urban

Very weak diversification

The 3 months correlation between Petrolimex and Industrial is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol and Industrial Urban Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Industrial Urban Dev 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 Industrial Urban. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Industrial Urban Dev has no effect on the direction of Petrolimex Information i.e., Petrolimex Information and Industrial Urban go up and down completely randomly.

Pair Corralation between Petrolimex Information and Industrial Urban

Assuming the 90 days trading horizon Petrolimex Information is expected to generate 2.49 times less return on investment than Industrial Urban. In addition to that, Petrolimex Information is 1.68 times more volatile than Industrial Urban Development. It trades about 0.07 of its total potential returns per unit of risk. Industrial Urban Development is currently generating about 0.3 per unit of volatility. If you would invest  3,160,000  in Industrial Urban Development on December 24, 2024 and sell it today you would earn a total of  900,000  from holding Industrial Urban Development or generate 28.48% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	45.76%
Values	Daily Returns

Petrolimex Information Technol  vs.  Industrial Urban Development

Petrolimex Information

Risk-Adjusted Performance

Modest

Over the last 90 days Petrolimex Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Petrolimex Information may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Industrial Urban Dev

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Industrial Urban Development are ranked lower than 23 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Industrial Urban displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrolimex Information and Industrial Urban

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

The idea behind Petrolimex Information Technology and Industrial Urban Development 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.