Correlation Between Global Electrical and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Global Electrical 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 Global Electrical and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Electrical Technology and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Global Electrical 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 Global Electrical with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Electrical and Petrolimex Petrochemical.
Diversification Opportunities for Global Electrical and Petrolimex Petrochemical
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Global and Petrolimex is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Global Electrical Technology and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Global Electrical 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 Global Electrical Technology 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 Global Electrical i.e., Global Electrical and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Global Electrical and Petrolimex Petrochemical
Assuming the 90 days trading horizon Global Electrical Technology is expected to generate 3.29 times more return on investment than Petrolimex Petrochemical. However, Global Electrical is 3.29 times more volatile than Petrolimex Petrochemical JSC. It trades about 0.04 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about -0.17 per unit of risk. If you would invest 2,498,095 in Global Electrical Technology on September 3, 2024 and sell it today you would earn a total of 151,905 from holding Global Electrical Technology or generate 6.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 77.95% |
| Values | Daily Returns |
Global Electrical Technology vs. Petrolimex Petrochemical JSC
Performance |
| Timeline |
| Global Electrical |
| Petrolimex Petrochemical |
Global Electrical and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Electrical and Petrolimex Petrochemical
The main advantage of trading using opposite Global Electrical and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Electrical 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.| Global Electrical vs. IDJ FINANCIAL | Global Electrical vs. PVI Reinsurance Corp | Global Electrical vs. Fecon Mining JSC | Global Electrical vs. Industrial Urban Development |
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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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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