Correlation Between Holmes Place and Petrochemical
Can any of the company-specific risk be diversified away by investing in both Holmes Place 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 Holmes Place and Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Holmes Place International and Petrochemical, you can compare the effects of market volatilities on Holmes Place 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 Holmes Place with a short position of Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Holmes Place and Petrochemical.
Diversification Opportunities for Holmes Place and Petrochemical
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Holmes and Petrochemical is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Holmes Place International and Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrochemical and Holmes Place 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 Holmes Place International 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 Holmes Place i.e., Holmes Place and Petrochemical go up and down completely randomly.
Pair Corralation between Holmes Place and Petrochemical
Assuming the 90 days trading horizon Holmes Place International is expected to generate 1.35 times more return on investment than Petrochemical. However, Holmes Place is 1.35 times more volatile than Petrochemical. It trades about 0.2 of its potential returns per unit of risk. Petrochemical is currently generating about 0.02 per unit of risk. If you would invest 51,480 in Holmes Place International on August 29, 2024 and sell it today you would earn a total of 4,940 from holding Holmes Place International or generate 9.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Holmes Place International vs. Petrochemical
Performance |
| Timeline |
| Holmes Place Interna |
| Petrochemical |
Holmes Place and Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Holmes Place and Petrochemical
The main advantage of trading using opposite Holmes Place and Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Holmes Place 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.| Holmes Place vs. Fattal 1998 Holdings | Holmes Place vs. Delek Group | Holmes Place vs. Bank Leumi Le Israel | Holmes Place vs. Matrix |
| Petrochemical vs. Opal Balance | Petrochemical vs. B Communications | Petrochemical vs. Holmes Place International | Petrochemical vs. Nova |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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