Correlation Between Petrolimex Information and Construction

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Can any of the company-specific risk be diversified away by investing in both Petrolimex Information and Construction 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 Information and Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrolimex Information Technology and Construction And Investment, you can compare the effects of market volatilities on Petrolimex Information and Construction 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 Information with a short position of Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Information and Construction.

Diversification Opportunities for Petrolimex Information and Construction

PetrolimexConstructionDiversified AwayPetrolimexConstructionDiversified Away100%
-0.1
  Correlation Coefficient

Good diversification

The 3 months correlation between Petrolimex and Construction is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol and Construction And Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction And Inv and Petrolimex Information 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 Information Technology are associated (or correlated) with Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction And Inv has no effect on the direction of Petrolimex Information i.e., Petrolimex Information and Construction go up and down completely randomly.

Pair Corralation between Petrolimex Information and Construction

Assuming the 90 days trading horizon Petrolimex Information Technology is expected to generate 2.33 times more return on investment than Construction. However, Petrolimex Information is 2.33 times more volatile than Construction And Investment. It trades about 0.04 of its potential returns per unit of risk. Construction And Investment is currently generating about 0.07 per unit of risk. If you would invest  2,428,203  in Petrolimex Information Technology on November 20, 2024 and sell it today you would earn a total of  521,797  from holding Petrolimex Information Technology or generate 21.49% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy55.19%
ValuesDaily Returns

Petrolimex Information Technol  vs.  Construction And Investment

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -50510
JavaScript chart by amCharts 3.21.15PIA L18
       Timeline  
Petrolimex Information 

Risk-Adjusted Performance

Insignificant

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Information Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrolimex Information displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15OctNovDecJanFebNovDecJanFeb25,50026,00026,50027,00027,50028,00028,50029,00029,500
Construction And Inv 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Construction And Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Construction is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.
JavaScript chart by amCharts 3.21.15DecJanFebJanFeb36,00037,00038,00039,00040,00041,00042,00043,00044,000

Petrolimex Information and Construction Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-8.77-6.57-4.37-2.170.02.124.366.598.8211.06 0.020.040.060.080.10
JavaScript chart by amCharts 3.21.15PIA L18
       Returns  

Pair Trading with Petrolimex Information and Construction

The main advantage of trading using opposite Petrolimex Information and Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex Information position performs unexpectedly, Construction 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 Construction will offset losses from the drop in Construction's long position.
The idea behind Petrolimex Information Technology and Construction And Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.

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