Correlation Between Everland Investment and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Everland Investment 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 Everland Investment and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Everland Investment JSC and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Everland Investment 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 Everland Investment with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Everland Investment and Petrolimex Petrochemical.
Diversification Opportunities for Everland Investment and Petrolimex Petrochemical
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Everland and Petrolimex is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Everland Investment JSC and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Everland Investment 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 Everland Investment JSC 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 Everland Investment i.e., Everland Investment and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Everland Investment and Petrolimex Petrochemical
Assuming the 90 days trading horizon Everland Investment is expected to generate 1.58 times less return on investment than Petrolimex Petrochemical. But when comparing it to its historical volatility, Everland Investment JSC is 2.23 times less risky than Petrolimex Petrochemical. It trades about 0.4 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest 2,330,000 in Petrolimex Petrochemical JSC on November 8, 2024 and sell it today you would earn a total of 250,000 from holding Petrolimex Petrochemical JSC or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 94.44% |
| Values | Daily Returns |
Everland Investment JSC vs. Petrolimex Petrochemical JSC
Performance |
| Timeline |
| Everland Investment JSC |
| Petrolimex Petrochemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Everland Investment and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Everland Investment and Petrolimex Petrochemical
The main advantage of trading using opposite Everland Investment and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Everland Investment 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.| Everland Investment vs. FIT INVEST JSC | Everland Investment vs. Damsan JSC | Everland Investment vs. An Phat Plastic | Everland Investment 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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