Correlation Between Petrolimex International and Construction JSC
Can any of the company-specific risk be diversified away by investing in both Petrolimex International and Construction JSC 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 International and Construction JSC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrolimex International Trading and Construction JSC No5, you can compare the effects of market volatilities on Petrolimex International and Construction JSC 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 International with a short position of Construction JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex International and Construction JSC.
Diversification Opportunities for Petrolimex International and Construction JSC
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Petrolimex and Construction is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex International Tradi and Construction JSC No5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction JSC No5 and Petrolimex International 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 International Trading are associated (or correlated) with Construction JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction JSC No5 has no effect on the direction of Petrolimex International i.e., Petrolimex International and Construction JSC go up and down completely randomly.
Pair Corralation between Petrolimex International and Construction JSC
Assuming the 90 days trading horizon Petrolimex International Trading is expected to generate 0.28 times more return on investment than Construction JSC. However, Petrolimex International Trading is 3.58 times less risky than Construction JSC. It trades about -0.1 of its potential returns per unit of risk. Construction JSC No5 is currently generating about -0.26 per unit of risk. If you would invest 547,000 in Petrolimex International Trading on October 25, 2024 and sell it today you would lose (12,000) from holding Petrolimex International Trading or give up 2.19% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 47.37% |
| Values | Daily Returns |
Petrolimex International Tradi vs. Construction JSC No5
Performance |
| Timeline |
| Petrolimex International |
| Construction JSC No5 |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Petrolimex International and Construction JSC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrolimex International and Construction JSC
The main advantage of trading using opposite Petrolimex International and Construction JSC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex International position performs unexpectedly, Construction JSC 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 JSC will offset losses from the drop in Construction JSC's long position.| Petrolimex International vs. FIT INVEST JSC | Petrolimex International vs. Damsan JSC | Petrolimex International vs. An Phat Plastic | Petrolimex International vs. APG Securities Joint |
| Construction JSC vs. FIT INVEST JSC | Construction JSC vs. Damsan JSC | Construction JSC vs. An Phat Plastic | Construction JSC vs. APG Securities Joint |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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