Correlation Between PetroTal Corp and Eco (Atlantic)

Can any of the company-specific risk be diversified away by investing in both PetroTal Corp and Eco (Atlantic) 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 PetroTal Corp and Eco (Atlantic) into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PetroTal Corp and Eco Oil Gas, you can compare the effects of market volatilities on PetroTal Corp and Eco (Atlantic) 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 PetroTal Corp with a short position of Eco (Atlantic). Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroTal Corp and Eco (Atlantic).

Diversification Opportunities for PetroTal Corp and Eco (Atlantic)

-0.16

Correlation Coefficient

PetroTal Corp  Eco (Atlantic)

Good diversification

The 3 months correlation between PetroTal and Eco is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding PetroTal Corp and Eco Oil Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eco (Atlantic) and PetroTal Corp 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 PetroTal Corp are associated (or correlated) with Eco (Atlantic). Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eco (Atlantic) has no effect on the direction of PetroTal Corp i.e., PetroTal Corp and Eco (Atlantic) go up and down completely randomly.

Pair Corralation between PetroTal Corp and Eco (Atlantic)

Assuming the 90 days horizon PetroTal Corp is expected to generate 0.3 times more return on investment than Eco (Atlantic). However, PetroTal Corp is 3.31 times less risky than Eco (Atlantic). It trades about 0.15 of its potential returns per unit of risk. Eco Oil Gas is currently generating about 0.01 per unit of risk. If you would invest  39.00  in PetroTal Corp on December 28, 2024 and sell it today you would earn a total of  9.00  from holding PetroTal Corp or generate 23.08% return on investment over 90 days.

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

PetroTal Corp  vs.  Eco Oil Gas

PetroTal Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in PetroTal Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile essential indicators, PetroTal Corp reported solid returns over the last few months and may actually be approaching a breakup point.

Eco (Atlantic)

Risk-Adjusted Performance

Very Weak

Over the last 90 days Eco Oil Gas has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Eco (Atlantic) is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with PetroTal Corp and Eco (Atlantic)

The main advantage of trading using opposite PetroTal Corp and Eco (Atlantic) positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroTal Corp position performs unexpectedly, Eco (Atlantic) 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 Eco (Atlantic) will offset losses from the drop in Eco (Atlantic)'s long position.

The idea behind PetroTal Corp and Eco Oil Gas 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.