Correlation Between Petrolimex Insurance and South Basic
Can any of the company-specific risk be diversified away by investing in both Petrolimex Insurance and South Basic 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 Petrolimex Insurance and South Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrolimex Insurance Corp and South Basic Chemicals, you can compare the effects of market volatilities on Petrolimex Insurance and South Basic 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 Petrolimex Insurance with a short position of South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Insurance and South Basic.
Diversification Opportunities for Petrolimex Insurance and South Basic
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Petrolimex and South is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Insurance Corp and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals and Petrolimex Insurance 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 Petrolimex Insurance Corp are associated (or correlated) with South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of Petrolimex Insurance i.e., Petrolimex Insurance and South Basic go up and down completely randomly.
Pair Corralation between Petrolimex Insurance and South Basic
Assuming the 90 days trading horizon Petrolimex Insurance Corp is expected to generate 0.87 times more return on investment than South Basic. However, Petrolimex Insurance Corp is 1.14 times less risky than South Basic. It trades about 0.3 of its potential returns per unit of risk. South Basic Chemicals is currently generating about 0.06 per unit of risk. If you would invest 2,175,000 in Petrolimex Insurance Corp on September 2, 2024 and sell it today you would earn a total of 225,000 from holding Petrolimex Insurance Corp or generate 10.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 72.73% |
| Values | Daily Returns |
Petrolimex Insurance Corp vs. South Basic Chemicals
Performance |
| Timeline |
| Petrolimex Insurance Corp |
| South Basic Chemicals |
Petrolimex Insurance and South Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrolimex Insurance and South Basic
The main advantage of trading using opposite Petrolimex Insurance and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex Insurance position performs unexpectedly, South Basic 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 South Basic will offset losses from the drop in South Basic's long position.| Petrolimex Insurance vs. FIT INVEST JSC | Petrolimex Insurance vs. Damsan JSC | Petrolimex Insurance vs. An Phat Plastic | Petrolimex Insurance vs. Alphanam ME |
| South Basic vs. Vu Dang Investment | South Basic vs. Thanh Dat Investment | South Basic vs. DOMESCO Medical Import | South Basic vs. Tien Giang Investment |
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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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