Correlation Between Petrolimex Information and TDG Global

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

Diversification Opportunities for Petrolimex Information and TDG Global

0.64

Correlation Coefficient

Petrolimex Information  TDG Global

Poor diversification

The 3 months correlation between Petrolimex and TDG is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol and TDG Global Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDG Global Investment 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 TDG Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDG Global Investment has no effect on the direction of Petrolimex Information i.e., Petrolimex Information and TDG Global go up and down completely randomly.

Pair Corralation between Petrolimex Information and TDG Global

Assuming the 90 days trading horizon Petrolimex Information is expected to generate 1.36 times less return on investment than TDG Global. In addition to that, Petrolimex Information is 1.07 times more volatile than TDG Global Investment. It trades about 0.07 of its total potential returns per unit of risk. TDG Global Investment is currently generating about 0.1 per unit of volatility. If you would invest  358,000  in TDG Global Investment on December 21, 2024 and sell it today you would earn a total of  47,000  from holding TDG Global Investment or generate 13.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	46.55%
Values	Daily Returns

Petrolimex Information Technol  vs.  TDG Global Investment

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.

TDG Global Investment

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TDG Global Investment are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, TDG Global displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrolimex Information and TDG Global

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

The idea behind Petrolimex Information Technology and TDG Global Investment 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.