Correlation Between Ampol and DCC PLC
Can any of the company-specific risk be diversified away by investing in both Ampol and DCC PLC 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 Ampol and DCC PLC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ampol Ltd ADR and DCC PLC ADR, you can compare the effects of market volatilities on Ampol and DCC PLC 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 Ampol with a short position of DCC PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ampol and DCC PLC.
Diversification Opportunities for Ampol and DCC PLC
Very good diversification
The 3 months correlation between Ampol and DCC is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Ampol Ltd ADR and DCC PLC ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DCC PLC ADR and Ampol 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 Ampol Ltd ADR are associated (or correlated) with DCC PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DCC PLC ADR has no effect on the direction of Ampol i.e., Ampol and DCC PLC go up and down completely randomly.
Pair Corralation between Ampol and DCC PLC
Assuming the 90 days horizon Ampol Ltd ADR is expected to under-perform the DCC PLC. In addition to that, Ampol is 5.37 times more volatile than DCC PLC ADR. It trades about -0.09 of its total potential returns per unit of risk. DCC PLC ADR is currently generating about 0.21 per unit of volatility. If you would invest 2,213 in DCC PLC ADR on September 12, 2024 and sell it today you would earn a total of 42.00 from holding DCC PLC ADR or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ampol Ltd ADR vs. DCC PLC ADR
Performance |
| Timeline |
| Ampol Ltd ADR |
| DCC PLC ADR |
Ampol and DCC PLC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ampol and DCC PLC
The main advantage of trading using opposite Ampol and DCC PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ampol position performs unexpectedly, DCC PLC 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 DCC PLC will offset losses from the drop in DCC PLC's long position.The idea behind Ampol Ltd ADR and DCC PLC ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| DCC PLC vs. Eneos Holdings ADR | DCC PLC vs. HF Sinclair Corp | DCC PLC vs. Idemitsu Kosan CoLtd | DCC PLC vs. PBF Energy |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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