Correlation Between Motor Oil and General Commercial
Can any of the company-specific risk be diversified away by investing in both Motor Oil and General Commercial 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 Motor Oil and General Commercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Motor Oil Corinth and General Commercial Industrial, you can compare the effects of market volatilities on Motor Oil and General Commercial 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 Motor Oil with a short position of General Commercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Motor Oil and General Commercial.
Diversification Opportunities for Motor Oil and General Commercial
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Motor and General is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Motor Oil Corinth and General Commercial Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on General Commercial and Motor Oil 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 Motor Oil Corinth are associated (or correlated) with General Commercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of General Commercial has no effect on the direction of Motor Oil i.e., Motor Oil and General Commercial go up and down completely randomly.
Pair Corralation between Motor Oil and General Commercial
Assuming the 90 days trading horizon Motor Oil is expected to generate 1.15 times less return on investment than General Commercial. But when comparing it to its historical volatility, Motor Oil Corinth is 1.24 times less risky than General Commercial. It trades about 0.08 of its potential returns per unit of risk. General Commercial Industrial is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 135.00 in General Commercial Industrial on October 26, 2024 and sell it today you would earn a total of 9.00 from holding General Commercial Industrial or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Motor Oil Corinth vs. General Commercial Industrial
Performance |
| Timeline |
| Motor Oil Corinth |
| General Commercial |
Motor Oil and General Commercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Motor Oil and General Commercial
The main advantage of trading using opposite Motor Oil and General Commercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Motor Oil position performs unexpectedly, General Commercial 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 General Commercial will offset losses from the drop in General Commercial's long position.| Motor Oil vs. Mytilineos SA | Motor Oil vs. Hellenic Petroleum SA | Motor Oil vs. Greek Organization of | Motor Oil vs. Hellenic Telecommunications Organization |
| General Commercial vs. Ekter SA | General Commercial vs. Elton International Trading | General Commercial vs. Piraeus Port Authority | General Commercial vs. Hellenic Petroleum SA |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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