Correlation Between Pacific Petroleum and Bich Chi

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

By analyzing existing cross correlation between Pacific Petroleum Transportation and Bich Chi Food, you can compare the effects of market volatilities on Pacific Petroleum and Bich Chi 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 Pacific Petroleum with a short position of Bich Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Bich Chi.

Diversification Opportunities for Pacific Petroleum and Bich Chi

0.59

Correlation Coefficient

Pacific Petroleum  Bich Chi

Very weak diversification

The 3 months correlation between Pacific and Bich is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and Bich Chi Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bich Chi Food and Pacific Petroleum 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 Pacific Petroleum Transportation are associated (or correlated) with Bich Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bich Chi Food has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and Bich Chi go up and down completely randomly.

Pair Corralation between Pacific Petroleum and Bich Chi

Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to generate 0.47 times more return on investment than Bich Chi. However, Pacific Petroleum Transportation is 2.11 times less risky than Bich Chi. It trades about 0.18 of its potential returns per unit of risk. Bich Chi Food is currently generating about 0.07 per unit of risk. If you would invest  1,640,000  in Pacific Petroleum Transportation on October 9, 2024 and sell it today you would earn a total of  170,000  from holding Pacific Petroleum Transportation or generate 10.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	51.22%
Values	Daily Returns

Pacific Petroleum Transportati  vs.  Bich Chi Food

Pacific Petroleum

Risk-Adjusted Performance

11 of 100

Good

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

Bich Chi Food

Risk-Adjusted Performance

0 of 100

Modest

Over the last 90 days Bich Chi Food has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating technical and fundamental indicators, Bich Chi displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacific Petroleum and Bich Chi

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

The idea behind Pacific Petroleum Transportation and Bich Chi Food 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.