Correlation Between Oriental Petroleum and LFM Properties
Can any of the company-specific risk be diversified away by investing in both Oriental Petroleum and LFM Properties 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 Oriental Petroleum and LFM Properties into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oriental Petroleum and and LFM Properties Corp, you can compare the effects of market volatilities on Oriental Petroleum and LFM Properties 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 Oriental Petroleum with a short position of LFM Properties. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oriental Petroleum and LFM Properties.
Diversification Opportunities for Oriental Petroleum and LFM Properties
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Oriental and LFM is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Oriental Petroleum and and LFM Properties Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LFM Properties Corp and Oriental Petroleum 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 Oriental Petroleum and are associated (or correlated) with LFM Properties. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LFM Properties Corp has no effect on the direction of Oriental Petroleum i.e., Oriental Petroleum and LFM Properties go up and down completely randomly.
Pair Corralation between Oriental Petroleum and LFM Properties
Assuming the 90 days trading horizon Oriental Petroleum and is expected to under-perform the LFM Properties. But the stock apears to be less risky and, when comparing its historical volatility, Oriental Petroleum and is 3.75 times less risky than LFM Properties. The stock trades about -0.04 of its potential returns per unit of risk. The LFM Properties Corp is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest 8.70 in LFM Properties Corp on September 1, 2024 and sell it today you would lose (3.60) from holding LFM Properties Corp or give up 41.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 66.67% |
| Values | Daily Returns |
Oriental Petroleum and vs. LFM Properties Corp
Performance |
| Timeline |
| Oriental Petroleum and |
| LFM Properties Corp |
Oriental Petroleum and LFM Properties Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oriental Petroleum and LFM Properties
The main advantage of trading using opposite Oriental Petroleum and LFM Properties positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oriental Petroleum position performs unexpectedly, LFM Properties 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 LFM Properties will offset losses from the drop in LFM Properties' long position.| Oriental Petroleum vs. Integrated Micro Electronics | Oriental Petroleum vs. Robinsons Retail Holdings | Oriental Petroleum vs. Century Pacific Food | Oriental Petroleum vs. Alliance Select Foods |
| LFM Properties vs. Concepcion Industrial Corp | LFM Properties vs. Apex Mining Co | LFM Properties vs. Metropolitan Bank Trust | LFM Properties vs. Philex Mining Corp |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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