Correlation Between Long Giang and Pacific Petroleum
Can any of the company-specific risk be diversified away by investing in both Long Giang and Pacific 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 Long Giang and Pacific Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long Giang Investment and Pacific Petroleum Transportation, you can compare the effects of market volatilities on Long Giang and Pacific 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 Long Giang with a short position of Pacific Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Giang and Pacific Petroleum.
Diversification Opportunities for Long Giang and Pacific Petroleum
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Long and Pacific is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Long Giang Investment and Pacific Petroleum Transportati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Petroleum and Long Giang 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 Long Giang Investment are associated (or correlated) with Pacific Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Petroleum has no effect on the direction of Long Giang i.e., Long Giang and Pacific Petroleum go up and down completely randomly.
Pair Corralation between Long Giang and Pacific Petroleum
Assuming the 90 days trading horizon Long Giang Investment is expected to generate 0.59 times more return on investment than Pacific Petroleum. However, Long Giang Investment is 1.69 times less risky than Pacific Petroleum. It trades about -0.06 of its potential returns per unit of risk. Pacific Petroleum Transportation is currently generating about -0.09 per unit of risk. If you would invest 250,000 in Long Giang Investment on November 7, 2024 and sell it today you would lose (3,000) from holding Long Giang Investment or give up 1.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Long Giang Investment vs. Pacific Petroleum Transportati
Performance |
| Timeline |
| Long Giang Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pacific Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Long Giang and Pacific Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long Giang and Pacific Petroleum
The main advantage of trading using opposite Long Giang and Pacific Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Giang position performs unexpectedly, Pacific 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 Pacific Petroleum will offset losses from the drop in Pacific Petroleum's long position.| Long Giang vs. HUD1 Investment and | Long Giang vs. Transport and Industry | Long Giang vs. Innovative Technology Development | Long Giang vs. HVC Investment and |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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