Correlation Between Petrolimex International and DOMESCO Medical

Can any of the company-specific risk be diversified away by investing in both Petrolimex International and DOMESCO Medical 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 International and DOMESCO Medical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petrolimex International Trading and DOMESCO Medical Import, you can compare the effects of market volatilities on Petrolimex International and DOMESCO Medical 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 International with a short position of DOMESCO Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex International and DOMESCO Medical.

Diversification Opportunities for Petrolimex International and DOMESCO Medical

0.31

Correlation Coefficient

Petrolimex International  DOMESCO Medical

Weak diversification

The 3 months correlation between Petrolimex and DOMESCO is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex International Tradi and DOMESCO Medical Import in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOMESCO Medical Import and Petrolimex International 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 International Trading are associated (or correlated) with DOMESCO Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOMESCO Medical Import has no effect on the direction of Petrolimex International i.e., Petrolimex International and DOMESCO Medical go up and down completely randomly.

Pair Corralation between Petrolimex International and DOMESCO Medical

Assuming the 90 days trading horizon Petrolimex International is expected to generate 2.25 times less return on investment than DOMESCO Medical. In addition to that, Petrolimex International is 1.63 times more volatile than DOMESCO Medical Import. It trades about 0.02 of its total potential returns per unit of risk. DOMESCO Medical Import is currently generating about 0.09 per unit of volatility. If you would invest  4,257,792  in DOMESCO Medical Import on October 11, 2024 and sell it today you would earn a total of  3,632,208  from holding DOMESCO Medical Import or generate 85.31% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.92%
Values	Daily Returns

Petrolimex International Tradi  vs.  DOMESCO Medical Import

Petrolimex International

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex International Trading are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Petrolimex International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

DOMESCO Medical Import

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in DOMESCO Medical Import are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, DOMESCO Medical displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrolimex International and DOMESCO Medical

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

The idea behind Petrolimex International Trading and DOMESCO Medical Import 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.