Correlation Between Transport and Petrolimex Petrochemical

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

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

Diversification Opportunities for Transport and Petrolimex Petrochemical

0.68

Correlation Coefficient

Transport  Petrolimex Petrochemical

Poor diversification

The 3 months correlation between Transport and Petrolimex is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Transport and Industry and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Transport 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 Transport and Industry 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 Transport i.e., Transport and Petrolimex Petrochemical go up and down completely randomly.

Pair Corralation between Transport and Petrolimex Petrochemical

Assuming the 90 days trading horizon Transport and Industry is expected to under-perform the Petrolimex Petrochemical. In addition to that, Transport is 2.67 times more volatile than Petrolimex Petrochemical JSC. It trades about -0.1 of its total potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.0 per unit of volatility. If you would invest  2,557,032  in Petrolimex Petrochemical JSC on October 4, 2024 and sell it today you would lose (287,032) from holding Petrolimex Petrochemical JSC or give up 11.23% of portfolio value over 90 days.

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

Transport and Industry  vs.  Petrolimex Petrochemical JSC

Transport and Industry

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transport and Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

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.

Pair Trading with Transport and Petrolimex Petrochemical

The main advantage of trading using opposite Transport and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport 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.

The idea behind Transport and Industry and Petrolimex Petrochemical JSC 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.

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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.