Correlation Between Alphanam and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Alphanam 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 Alphanam and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphanam ME and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Alphanam 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 Alphanam with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and Petrolimex Petrochemical.
Diversification Opportunities for Alphanam and Petrolimex Petrochemical
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Alphanam and Petrolimex is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Alphanam 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 Alphanam ME 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 Alphanam i.e., Alphanam and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Alphanam and Petrolimex Petrochemical
Assuming the 90 days trading horizon Alphanam ME is expected to generate 2.32 times more return on investment than Petrolimex Petrochemical. However, Alphanam is 2.32 times more volatile than Petrolimex Petrochemical JSC. It trades about -0.08 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about -0.23 per unit of risk. If you would invest 560,000 in Alphanam ME on August 28, 2024 and sell it today you would lose (60,000) from holding Alphanam ME or give up 10.71% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 53.23% |
| Values | Daily Returns |
Alphanam ME vs. Petrolimex Petrochemical JSC
Performance |
| Timeline |
| Alphanam ME |
| Petrolimex Petrochemical |
Alphanam and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphanam and Petrolimex Petrochemical
The main advantage of trading using opposite Alphanam and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphanam 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.| Alphanam vs. FIT INVEST JSC | Alphanam vs. Damsan JSC | Alphanam vs. An Phat Plastic | Alphanam vs. APG Securities Joint |
| Petrolimex Petrochemical vs. FIT INVEST JSC | Petrolimex Petrochemical vs. Damsan JSC | Petrolimex Petrochemical vs. An Phat Plastic | Petrolimex Petrochemical vs. APG Securities Joint |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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