Correlation Between Petrolimex Information and VTC Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Petrolimex Information and VTC Telecommunicatio 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 VTC Telecommunicatio 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 VTC Telecommunications JSC, you can compare the effects of market volatilities on Petrolimex Information and VTC Telecommunicatio 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 VTC Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Information and VTC Telecommunicatio.
Diversification Opportunities for Petrolimex Information and VTC Telecommunicatio
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petrolimex and VTC is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol and VTC Telecommunications JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTC Telecommunications 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 VTC Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTC Telecommunications has no effect on the direction of Petrolimex Information i.e., Petrolimex Information and VTC Telecommunicatio go up and down completely randomly.
Pair Corralation between Petrolimex Information and VTC Telecommunicatio
Assuming the 90 days trading horizon Petrolimex Information Technology is expected to generate 1.13 times more return on investment than VTC Telecommunicatio. However, Petrolimex Information is 1.13 times more volatile than VTC Telecommunications JSC. It trades about 0.33 of its potential returns per unit of risk. VTC Telecommunications JSC is currently generating about 0.29 per unit of risk. If you would invest 2,630,000 in Petrolimex Information Technology on November 6, 2024 and sell it today you would earn a total of 260,000 from holding Petrolimex Information Technology or generate 9.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 64.29% |
| Values | Daily Returns |
Petrolimex Information Technol vs. VTC Telecommunications JSC
Performance |
| Timeline |
| Petrolimex Information |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| VTC Telecommunications |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Petrolimex Information and VTC Telecommunicatio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrolimex Information and VTC Telecommunicatio
The main advantage of trading using opposite Petrolimex Information and VTC Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex Information position performs unexpectedly, VTC Telecommunicatio 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 VTC Telecommunicatio will offset losses from the drop in VTC Telecommunicatio's long position.The idea behind Petrolimex Information Technology and VTC Telecommunications JSC 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules |