Correlation Between Oil Natural and Indian Oil
Can any of the company-specific risk be diversified away by investing in both Oil Natural and Indian Oil 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 Oil Natural and Indian Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Natural Gas and Indian Oil, you can compare the effects of market volatilities on Oil Natural and Indian Oil 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 Oil Natural with a short position of Indian Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Natural and Indian Oil.
Diversification Opportunities for Oil Natural and Indian Oil
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oil and Indian is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Oil Natural Gas and Indian Oil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Indian Oil and Oil Natural 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 Oil Natural Gas are associated (or correlated) with Indian Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Indian Oil has no effect on the direction of Oil Natural i.e., Oil Natural and Indian Oil go up and down completely randomly.
Pair Corralation between Oil Natural and Indian Oil
Assuming the 90 days trading horizon Oil Natural Gas is expected to generate 0.77 times more return on investment than Indian Oil. However, Oil Natural Gas is 1.29 times less risky than Indian Oil. It trades about -0.23 of its potential returns per unit of risk. Indian Oil is currently generating about -0.4 per unit of risk. If you would invest 26,266 in Oil Natural Gas on August 25, 2024 and sell it today you would lose (1,706) from holding Oil Natural Gas or give up 6.5% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Oil Natural Gas vs. Indian Oil
Performance |
| Timeline |
| Oil Natural Gas |
| Indian Oil |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Oil Natural and Indian Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Natural and Indian Oil
The main advantage of trading using opposite Oil Natural and Indian Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Natural position performs unexpectedly, Indian Oil 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 Indian Oil will offset losses from the drop in Indian Oil's long position.| Oil Natural vs. Tata Communications Limited | Oil Natural vs. The Hi Tech Gears | Oil Natural vs. Allied Blenders Distillers | Oil Natural vs. DiGiSPICE Technologies Limited |
| Indian Oil vs. Univa Foods Limited | Indian Oil vs. Mrs Bectors Food | Indian Oil vs. Advani Hotels Resorts | Indian Oil vs. SINCLAIRS HOTELS ORD |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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