Correlation Between Asia Commercial and Pacific Petroleum
Can any of the company-specific risk be diversified away by investing in both Asia Commercial and Pacific Petroleum 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 Asia Commercial and Pacific Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Commercial Bank and Pacific Petroleum Transportation, you can compare the effects of market volatilities on Asia Commercial and Pacific Petroleum 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 Asia Commercial with a short position of Pacific Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Commercial and Pacific Petroleum.
Diversification Opportunities for Asia Commercial and Pacific Petroleum
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asia and Pacific is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Asia Commercial Bank and Pacific Petroleum Transportati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Petroleum and Asia Commercial 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 Asia Commercial Bank are associated (or correlated) with Pacific Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Petroleum has no effect on the direction of Asia Commercial i.e., Asia Commercial and Pacific Petroleum go up and down completely randomly.
Pair Corralation between Asia Commercial and Pacific Petroleum
Assuming the 90 days trading horizon Asia Commercial Bank is expected to under-perform the Pacific Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Asia Commercial Bank is 1.37 times less risky than Pacific Petroleum. The stock trades about -0.05 of its potential returns per unit of risk. The Pacific Petroleum Transportation is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,575,000 in Pacific Petroleum Transportation on August 28, 2024 and sell it today you would earn a total of 15,000 from holding Pacific Petroleum Transportation or generate 0.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Commercial Bank vs. Pacific Petroleum Transportati
Performance |
| Timeline |
| Asia Commercial Bank |
| Pacific Petroleum |
Asia Commercial and Pacific Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Commercial and Pacific Petroleum
The main advantage of trading using opposite Asia Commercial and Pacific Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Commercial position performs unexpectedly, Pacific Petroleum 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 Pacific Petroleum will offset losses from the drop in Pacific Petroleum's long position.| Asia Commercial vs. FIT INVEST JSC | Asia Commercial vs. Damsan JSC | Asia Commercial vs. An Phat Plastic | Asia Commercial vs. APG Securities Joint |
| Pacific Petroleum vs. Idico JSC | Pacific Petroleum vs. Hochiminh City Metal | Pacific Petroleum vs. Atesco Industrial Cartering | Pacific Petroleum vs. Danang Education 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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