Correlation Between Oil Refineries and Tamar Petroleum
Can any of the company-specific risk be diversified away by investing in both Oil Refineries and Tamar 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 Oil Refineries and Tamar Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oil Refineries and Tamar Petroleum, you can compare the effects of market volatilities on Oil Refineries and Tamar 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 Oil Refineries with a short position of Tamar Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Refineries and Tamar Petroleum.
Diversification Opportunities for Oil Refineries and Tamar Petroleum
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Oil and Tamar is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Oil Refineries and Tamar Petroleum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tamar Petroleum and Oil Refineries 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 Refineries are associated (or correlated) with Tamar Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tamar Petroleum has no effect on the direction of Oil Refineries i.e., Oil Refineries and Tamar Petroleum go up and down completely randomly.
Pair Corralation between Oil Refineries and Tamar Petroleum
Assuming the 90 days trading horizon Oil Refineries is expected to under-perform the Tamar Petroleum. In addition to that, Oil Refineries is 1.05 times more volatile than Tamar Petroleum. It trades about -0.04 of its total potential returns per unit of risk. Tamar Petroleum is currently generating about 0.26 per unit of volatility. If you would invest 189,100 in Tamar Petroleum on September 3, 2024 and sell it today you would earn a total of 47,400 from holding Tamar Petroleum or generate 25.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Oil Refineries vs. Tamar Petroleum
Performance |
| Timeline |
| Oil Refineries |
| Tamar Petroleum |
Oil Refineries and Tamar Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oil Refineries and Tamar Petroleum
The main advantage of trading using opposite Oil Refineries and Tamar Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oil Refineries position performs unexpectedly, Tamar 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 Tamar Petroleum will offset losses from the drop in Tamar Petroleum's long position.| Oil Refineries vs. Delek Group | Oil Refineries vs. Bank Leumi Le Israel | Oil Refineries vs. ICL Israel Chemicals | Oil Refineries vs. Bank Hapoalim |
| Tamar Petroleum vs. Delek Group | Tamar Petroleum vs. NewMed Energy | Tamar Petroleum vs. Fattal 1998 Holdings | Tamar Petroleum vs. Oil Refineries |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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