Correlation Between GODM Investments and Petrochemical
Can any of the company-specific risk be diversified away by investing in both GODM Investments and 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 GODM Investments and Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between GODM Investments and Petrochemical, you can compare the effects of market volatilities on GODM Investments and 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 GODM Investments with a short position of Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of GODM Investments and Petrochemical.
Diversification Opportunities for GODM Investments and Petrochemical
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GODM and Petrochemical is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding GODM Investments and Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrochemical and GODM Investments 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 GODM Investments are associated (or correlated) with Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrochemical has no effect on the direction of GODM Investments i.e., GODM Investments and Petrochemical go up and down completely randomly.
Pair Corralation between GODM Investments and Petrochemical
Assuming the 90 days trading horizon GODM Investments is expected to under-perform the Petrochemical. In addition to that, GODM Investments is 1.18 times more volatile than Petrochemical. It trades about -0.09 of its total potential returns per unit of risk. Petrochemical is currently generating about 0.0 per unit of volatility. If you would invest 21,070 in Petrochemical on September 1, 2024 and sell it today you would lose (990.00) from holding Petrochemical or give up 4.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
GODM Investments vs. Petrochemical
Performance |
| Timeline |
| GODM Investments |
| Petrochemical |
GODM Investments and Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GODM Investments and Petrochemical
The main advantage of trading using opposite GODM Investments and Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GODM Investments position performs unexpectedly, 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 Petrochemical will offset losses from the drop in Petrochemical's long position.| GODM Investments vs. Menif Financial Services | GODM Investments vs. Accel Solutions Group | GODM Investments vs. Rani Zim Shopping | GODM Investments vs. Rapac Communication Infrastructure |
| Petrochemical vs. Brainsway | Petrochemical vs. Mivne Real Estate | Petrochemical vs. Photomyne | Petrochemical vs. Israel Land Development |
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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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