Correlation Between Petrolimex Information and Book

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

Diversification Opportunities for Petrolimex Information and Book

0.07

Correlation Coefficient

Petrolimex Information  Book

Significant diversification

The 3 months correlation between Petrolimex and Book is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol and Book And Educational in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Book And Educational 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 Book. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Book And Educational has no effect on the direction of Petrolimex Information i.e., Petrolimex Information and Book go up and down completely randomly.

Pair Corralation between Petrolimex Information and Book

Assuming the 90 days trading horizon Petrolimex Information Technology is expected to under-perform the Book. But the stock apears to be less risky and, when comparing its historical volatility, Petrolimex Information Technology is 1.4 times less risky than Book. The stock trades about -0.11 of its potential returns per unit of risk. The Book And Educational is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,700,000  in Book And Educational on September 25, 2024 and sell it today you would earn a total of  0.00  from holding Book And Educational or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	83.33%
Values	Daily Returns

Petrolimex Information Technol  vs.  Book And Educational

Petrolimex Information

Risk-Adjusted Performance

0 of 100

Very Weak

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 healthy basic indicators, Petrolimex Information is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Book And Educational

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Book And Educational has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Book 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 Book

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

The idea behind Petrolimex Information Technology and Book And Educational 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.