Correlation Between Petrolimex Petrochemical and FIT INVEST

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

By analyzing existing cross correlation between Petrolimex Petrochemical JSC and FIT INVEST JSC, you can compare the effects of market volatilities on Petrolimex Petrochemical and FIT INVEST 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 Petrochemical with a short position of FIT INVEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Petrochemical and FIT INVEST.

Diversification Opportunities for Petrolimex Petrochemical and FIT INVEST

-0.21

Correlation Coefficient

Petrolimex Petrochemical  FIT INVEST

Very good diversification

The 3 months correlation between Petrolimex and FIT is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Petrochemical JSC and FIT INVEST JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT INVEST JSC and Petrolimex Petrochemical 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 Petrochemical JSC are associated (or correlated) with FIT INVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT INVEST JSC has no effect on the direction of Petrolimex Petrochemical i.e., Petrolimex Petrochemical and FIT INVEST go up and down completely randomly.

Pair Corralation between Petrolimex Petrochemical and FIT INVEST

Assuming the 90 days trading horizon Petrolimex Petrochemical is expected to generate 1.24 times less return on investment than FIT INVEST. In addition to that, Petrolimex Petrochemical is 1.51 times more volatile than FIT INVEST JSC. It trades about 0.08 of its total potential returns per unit of risk. FIT INVEST JSC is currently generating about 0.14 per unit of volatility. If you would invest  421,000  in FIT INVEST JSC on December 30, 2024 and sell it today you would earn a total of  44,000  from holding FIT INVEST JSC or generate 10.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Petrolimex Petrochemical JSC  vs.  FIT INVEST JSC

Petrolimex Petrochemical

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Petrochemical JSC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Petrolimex Petrochemical may actually be approaching a critical reversion point that can send shares even higher in April 2025.

FIT INVEST JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FIT INVEST JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FIT INVEST may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Petrolimex Petrochemical and FIT INVEST

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

The idea behind Petrolimex Petrochemical JSC and FIT INVEST JSC 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.

Check out your portfolio center.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.