Correlation Between Pacific Petroleum and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Pacific Petroleum and Petrolimex Petrochemical 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 Petrolimex Petrochemical 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 Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Pacific Petroleum and Petrolimex Petrochemical 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 Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Petrolimex Petrochemical.
Diversification Opportunities for Pacific Petroleum and Petrolimex Petrochemical
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Pacific and Petrolimex is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical 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 Petrolimex Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Petrochemical has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Pacific Petroleum and Petrolimex Petrochemical
Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to generate 0.82 times more return on investment than Petrolimex Petrochemical. However, Pacific Petroleum Transportation is 1.22 times less risky than Petrolimex Petrochemical. It trades about 0.07 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.0 per unit of risk. If you would invest 996,297 in Pacific Petroleum Transportation on October 4, 2024 and sell it today you would earn a total of 773,703 from holding Pacific Petroleum Transportation or generate 77.66% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 99.59% |
Values | Daily Returns |
Pacific Petroleum Transportati vs. Petrolimex Petrochemical JSC
Performance |
Timeline |
Pacific Petroleum |
Petrolimex Petrochemical |
Pacific Petroleum and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pacific Petroleum and Petrolimex Petrochemical
The main advantage of trading using opposite Pacific Petroleum and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Petroleum position performs unexpectedly, Petrolimex Petrochemical 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 Petrochemical will offset losses from the drop in Petrolimex Petrochemical's long position.Pacific Petroleum vs. Ba Ria Thermal | Pacific Petroleum vs. CEO Group JSC | Pacific Petroleum vs. Pha Le Plastics | Pacific Petroleum vs. Tay Ninh Rubber |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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