Correlation Between Paramount Communications and Southern Petrochemicals
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By analyzing existing cross correlation between Paramount Communications Limited and Southern Petrochemicals Industries, you can compare the effects of market volatilities on Paramount Communications and Southern Petrochemicals 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 Paramount Communications with a short position of Southern Petrochemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paramount Communications and Southern Petrochemicals.
Diversification Opportunities for Paramount Communications and Southern Petrochemicals
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Paramount and Southern is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Paramount Communications Limit and Southern Petrochemicals Indust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Petrochemicals and Paramount Communications 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 Paramount Communications Limited are associated (or correlated) with Southern Petrochemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Petrochemicals has no effect on the direction of Paramount Communications i.e., Paramount Communications and Southern Petrochemicals go up and down completely randomly.
Pair Corralation between Paramount Communications and Southern Petrochemicals
Assuming the 90 days trading horizon Paramount Communications Limited is expected to generate 1.89 times more return on investment than Southern Petrochemicals. However, Paramount Communications is 1.89 times more volatile than Southern Petrochemicals Industries. It trades about 0.4 of its potential returns per unit of risk. Southern Petrochemicals Industries is currently generating about 0.15 per unit of risk. If you would invest 6,677 in Paramount Communications Limited on September 21, 2024 and sell it today you would earn a total of 1,873 from holding Paramount Communications Limited or generate 28.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Paramount Communications Limit vs. Southern Petrochemicals Indust
Performance |
| Timeline |
| Paramount Communications |
| Southern Petrochemicals |
Paramount Communications and Southern Petrochemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Paramount Communications and Southern Petrochemicals
The main advantage of trading using opposite Paramount Communications and Southern Petrochemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paramount Communications position performs unexpectedly, Southern Petrochemicals 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 Southern Petrochemicals will offset losses from the drop in Southern Petrochemicals' long position.| Paramount Communications vs. Life Insurance | Paramount Communications vs. Power Finance | Paramount Communications vs. HDFC Bank Limited | Paramount Communications vs. State Bank of |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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