Correlation Between Materials Petroleum and Ducgiang Chemicals
Can any of the company-specific risk be diversified away by investing in both Materials Petroleum and Ducgiang Chemicals 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 Ducgiang Chemicals 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 Ducgiang Chemicals Detergent, you can compare the effects of market volatilities on Materials Petroleum and Ducgiang Chemicals 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 Ducgiang Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Petroleum and Ducgiang Chemicals.
Diversification Opportunities for Materials Petroleum and Ducgiang Chemicals
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Materials and Ducgiang is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Materials Petroleum JSC and Ducgiang Chemicals Detergent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducgiang Chemicals 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 Ducgiang Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducgiang Chemicals has no effect on the direction of Materials Petroleum i.e., Materials Petroleum and Ducgiang Chemicals go up and down completely randomly.
Pair Corralation between Materials Petroleum and Ducgiang Chemicals
Assuming the 90 days trading horizon Materials Petroleum JSC is expected to generate 4.2 times more return on investment than Ducgiang Chemicals. However, Materials Petroleum is 4.2 times more volatile than Ducgiang Chemicals Detergent. It trades about 0.03 of its potential returns per unit of risk. Ducgiang Chemicals Detergent is currently generating about -0.21 per unit of risk. If you would invest 2,930,000 in Materials Petroleum JSC on October 29, 2024 and sell it today you would earn a total of 15,000 from holding Materials Petroleum JSC or generate 0.51% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Materials Petroleum JSC vs. Ducgiang Chemicals Detergent
Performance |
| Timeline |
| Materials Petroleum JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Ducgiang Chemicals |
Materials Petroleum and Ducgiang Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materials Petroleum and Ducgiang Chemicals
The main advantage of trading using opposite Materials Petroleum and Ducgiang Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Petroleum position performs unexpectedly, Ducgiang Chemicals 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 Ducgiang Chemicals will offset losses from the drop in Ducgiang Chemicals' long position.| Materials Petroleum vs. FPT Digital Retail | Materials Petroleum vs. Sea Air Freight | Materials Petroleum vs. Ducgiang Chemicals Detergent | Materials Petroleum vs. Bao Ngoc Investment |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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