Correlation Between Materials Petroleum and CEO Group
Can any of the company-specific risk be diversified away by investing in both Materials Petroleum and CEO Group 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 Materials Petroleum and CEO Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materials Petroleum JSC and CEO Group JSC, you can compare the effects of market volatilities on Materials Petroleum and CEO Group 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 Materials Petroleum with a short position of CEO Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Petroleum and CEO Group.
Diversification Opportunities for Materials Petroleum and CEO Group
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Materials and CEO is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Materials Petroleum JSC and CEO Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CEO Group JSC and Materials 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 Materials Petroleum JSC are associated (or correlated) with CEO Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CEO Group JSC has no effect on the direction of Materials Petroleum i.e., Materials Petroleum and CEO Group go up and down completely randomly.
Pair Corralation between Materials Petroleum and CEO Group
Assuming the 90 days trading horizon Materials Petroleum is expected to generate 1.88 times less return on investment than CEO Group. In addition to that, Materials Petroleum is 2.0 times more volatile than CEO Group JSC. It trades about 0.09 of its total potential returns per unit of risk. CEO Group JSC is currently generating about 0.34 per unit of volatility. If you would invest 1,200,000 in CEO Group JSC on November 8, 2024 and sell it today you would earn a total of 160,000 from holding CEO Group JSC or generate 13.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 47.06% |
| Values | Daily Returns |
Materials Petroleum JSC vs. CEO Group JSC
Performance |
| Timeline |
| Materials Petroleum JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| CEO Group JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Materials Petroleum and CEO Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materials Petroleum and CEO Group
The main advantage of trading using opposite Materials Petroleum and CEO Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Petroleum position performs unexpectedly, CEO Group 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 CEO Group will offset losses from the drop in CEO Group's long position.| Materials Petroleum vs. Saigon Viendong Technology | Materials Petroleum vs. Sao Ta Foods | Materials Petroleum vs. Saigon Beer Alcohol | Materials Petroleum vs. Investment and Industrial |
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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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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