Correlation Between Petrolimex Petrochemical and HVC Investment

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

Diversification Opportunities for Petrolimex Petrochemical and HVC Investment

-0.14

Correlation Coefficient

Petrolimex Petrochemical  HVC Investment

Good diversification

The 3 months correlation between Petrolimex and HVC is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Petrochemical JSC and HVC Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HVC Investment 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 HVC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HVC Investment has no effect on the direction of Petrolimex Petrochemical i.e., Petrolimex Petrochemical and HVC Investment go up and down completely randomly.

Pair Corralation between Petrolimex Petrochemical and HVC Investment

Assuming the 90 days trading horizon Petrolimex Petrochemical JSC is expected to under-perform the HVC Investment. But the stock apears to be less risky and, when comparing its historical volatility, Petrolimex Petrochemical JSC is 1.1 times less risky than HVC Investment. The stock trades about -0.02 of its potential returns per unit of risk. The HVC Investment and is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  802,287  in HVC Investment and on October 10, 2024 and sell it today you would earn a total of  108,713  from holding HVC Investment and or generate 13.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Petrolimex Petrochemical JSC  vs.  HVC Investment and

Petrolimex Petrochemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrolimex Petrochemical JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Petrolimex Petrochemical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

HVC Investment

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in HVC Investment and are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, HVC Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrolimex Petrochemical and HVC Investment

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

The idea behind Petrolimex Petrochemical JSC and HVC Investment and 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.