Correlation Between Post and Petrolimex International

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

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

Diversification Opportunities for Post and Petrolimex International

0.92

Correlation Coefficient

Post  Petrolimex International

Almost no diversification

The 3 months correlation between Post and Petrolimex is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Post and Telecommunications and Petrolimex International Tradi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex International and Post 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 Post and Telecommunications are associated (or correlated) with Petrolimex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex International has no effect on the direction of Post i.e., Post and Petrolimex International go up and down completely randomly.

Pair Corralation between Post and Petrolimex International

Assuming the 90 days trading horizon Post and Telecommunications is expected to generate 1.12 times more return on investment than Petrolimex International. However, Post is 1.12 times more volatile than Petrolimex International Trading. It trades about 0.14 of its potential returns per unit of risk. Petrolimex International Trading is currently generating about 0.13 per unit of risk. If you would invest  459,000  in Post and Telecommunications on December 23, 2024 and sell it today you would earn a total of  111,000  from holding Post and Telecommunications or generate 24.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	96.67%
Values	Daily Returns

Post and Telecommunications  vs.  Petrolimex International Tradi

Post and Telecommuni

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Post and Telecommunications are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Post displayed solid returns over the last few months and may actually be approaching a breakup point.

Petrolimex International

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex International Trading are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrolimex International displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Post and Petrolimex International

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

The idea behind Post and Telecommunications and Petrolimex International Trading 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.