Correlation Between Petrolimex Information and Van Dien

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

Diversification Opportunities for Petrolimex Information and Van Dien

-0.43

Correlation Coefficient

Petrolimex Information  Van Dien

Very good diversification

The 3 months correlation between Petrolimex and Van is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused 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 Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of Petrolimex Information i.e., Petrolimex Information and Van Dien go up and down completely randomly.

Pair Corralation between Petrolimex Information and Van Dien

Assuming the 90 days trading horizon Petrolimex Information is expected to generate 1.13 times less return on investment than Van Dien. In addition to that, Petrolimex Information is 1.31 times more volatile than Van Dien Fused. It trades about 0.04 of its total potential returns per unit of risk. Van Dien Fused is currently generating about 0.06 per unit of volatility. If you would invest  712,737  in Van Dien Fused on October 9, 2024 and sell it today you would earn a total of  637,263  from holding Van Dien Fused or generate 89.41% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	75.71%
Values	Daily Returns

Petrolimex Information Technol  vs.  Van Dien Fused

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.

Van Dien Fused

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Van Dien Fused has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Van Dien 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 Van Dien

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

The idea behind Petrolimex Information Technology and Van Dien Fused 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.