Correlation Between Alliance Select and Oriental Petroleum
Can any of the company-specific risk be diversified away by investing in both Alliance Select and Oriental Petroleum 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 Alliance Select and Oriental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alliance Select Foods and Oriental Petroleum and, you can compare the effects of market volatilities on Alliance Select and Oriental Petroleum 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 Alliance Select with a short position of Oriental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alliance Select and Oriental Petroleum.
Diversification Opportunities for Alliance Select and Oriental Petroleum
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alliance and Oriental is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Select Foods and Oriental Petroleum and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Petroleum and and Alliance Select 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 Alliance Select Foods are associated (or correlated) with Oriental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Petroleum and has no effect on the direction of Alliance Select i.e., Alliance Select and Oriental Petroleum go up and down completely randomly.
Pair Corralation between Alliance Select and Oriental Petroleum
Assuming the 90 days trading horizon Alliance Select Foods is expected to generate 0.68 times more return on investment than Oriental Petroleum. However, Alliance Select Foods is 1.48 times less risky than Oriental Petroleum. It trades about -0.21 of its potential returns per unit of risk. Oriental Petroleum and is currently generating about -0.32 per unit of risk. If you would invest 40.00 in Alliance Select Foods on September 14, 2024 and sell it today you would lose (3.00) from holding Alliance Select Foods or give up 7.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 93.33% |
| Values | Daily Returns |
Alliance Select Foods vs. Oriental Petroleum and
Performance |
| Timeline |
| Alliance Select Foods |
| Oriental Petroleum and |
Alliance Select and Oriental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alliance Select and Oriental Petroleum
The main advantage of trading using opposite Alliance Select and Oriental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Select position performs unexpectedly, Oriental Petroleum 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 Oriental Petroleum will offset losses from the drop in Oriental Petroleum's long position.| Alliance Select vs. Atlas Consolidated Mining | Alliance Select vs. Rizal Commercial Banking | Alliance Select vs. Security Bank Corp | Alliance Select vs. Top Frontier Investment |
| Oriental Petroleum vs. Concepcion Industrial Corp | Oriental Petroleum vs. Alliance Select Foods | Oriental Petroleum vs. Philex Mining Corp | Oriental Petroleum vs. Apex Mining Co |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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