Correlation Between Fecon Mining and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Fecon Mining 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 Fecon Mining and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fecon Mining JSC and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Fecon Mining 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 Fecon Mining with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fecon Mining and Petrolimex Petrochemical.
Diversification Opportunities for Fecon Mining and Petrolimex Petrochemical
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Fecon and Petrolimex is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Fecon Mining 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 Fecon Mining 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 Fecon Mining 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 Fecon Mining i.e., Fecon Mining and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Fecon Mining and Petrolimex Petrochemical
Assuming the 90 days trading horizon Fecon Mining JSC is expected to under-perform the Petrolimex Petrochemical. In addition to that, Fecon Mining is 1.14 times more volatile than Petrolimex Petrochemical JSC. It trades about -0.24 of its total potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.19 per unit of volatility. If you would invest 2,270,000 in Petrolimex Petrochemical JSC on October 30, 2024 and sell it today you would earn a total of 190,000 from holding Petrolimex Petrochemical JSC or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fecon Mining JSC vs. Petrolimex Petrochemical JSC
Performance |
| Timeline |
| Fecon Mining JSC |
| Petrolimex Petrochemical |
Fecon Mining and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fecon Mining and Petrolimex Petrochemical
The main advantage of trading using opposite Fecon Mining and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fecon Mining 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.| Fecon Mining vs. FIT INVEST JSC | Fecon Mining vs. Damsan JSC | Fecon Mining vs. An Phat Plastic | Fecon Mining 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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