Correlation Between Attock Petroleum and Oil
Can any of the company-specific risk be diversified away by investing in both Attock Petroleum and Oil 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 Attock Petroleum and Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Attock Petroleum and Oil and Gas, you can compare the effects of market volatilities on Attock Petroleum and Oil 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 Attock Petroleum with a short position of Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Attock Petroleum and Oil.
Diversification Opportunities for Attock Petroleum and Oil
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Attock and Oil is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Attock Petroleum and Oil and Gas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oil and Gas and Attock 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 Attock Petroleum are associated (or correlated) with Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oil and Gas has no effect on the direction of Attock Petroleum i.e., Attock Petroleum and Oil go up and down completely randomly.
Pair Corralation between Attock Petroleum and Oil
Assuming the 90 days trading horizon Attock Petroleum is expected to generate 1.6 times less return on investment than Oil. But when comparing it to its historical volatility, Attock Petroleum is 1.38 times less risky than Oil. It trades about 0.11 of its potential returns per unit of risk. Oil and Gas is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 6,665 in Oil and Gas on September 12, 2024 and sell it today you would earn a total of 12,711 from holding Oil and Gas or generate 190.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Attock Petroleum vs. Oil and Gas
Performance |
| Timeline |
| Attock Petroleum |
| Oil and Gas |
Attock Petroleum and Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Attock Petroleum and Oil
The main advantage of trading using opposite Attock Petroleum and Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Attock Petroleum position performs unexpectedly, Oil 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 Oil will offset losses from the drop in Oil's long position.| Attock Petroleum vs. Invest Capital Investment | Attock Petroleum vs. Engro Polymer Chemicals | Attock Petroleum vs. Sardar Chemical Industries | Attock Petroleum vs. Premier Insurance |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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