Correlation Between Petrolimex Petrochemical and FPT Securities
Can any of the company-specific risk be diversified away by investing in both Petrolimex Petrochemical and FPT Securities 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 Petrochemical and FPT Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrolimex Petrochemical JSC and FPT Securities JSC, you can compare the effects of market volatilities on Petrolimex Petrochemical and FPT Securities 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 Petrochemical with a short position of FPT Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Petrochemical and FPT Securities.
Diversification Opportunities for Petrolimex Petrochemical and FPT Securities
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petrolimex and FPT is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Petrochemical JSC and FPT Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Securities JSC and Petrolimex Petrochemical 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 Petrochemical JSC are associated (or correlated) with FPT Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Securities JSC has no effect on the direction of Petrolimex Petrochemical i.e., Petrolimex Petrochemical and FPT Securities go up and down completely randomly.
Pair Corralation between Petrolimex Petrochemical and FPT Securities
Assuming the 90 days trading horizon Petrolimex Petrochemical JSC is expected to under-perform the FPT Securities. But the stock apears to be less risky and, when comparing its historical volatility, Petrolimex Petrochemical JSC is 1.36 times less risky than FPT Securities. The stock trades about -0.09 of its potential returns per unit of risk. The FPT Securities JSC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,017,644 in FPT Securities JSC on September 2, 2024 and sell it today you would earn a total of 1,442,356 from holding FPT Securities JSC or generate 47.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Petrolimex Petrochemical JSC vs. FPT Securities JSC
Performance |
| Timeline |
| Petrolimex Petrochemical |
| FPT Securities JSC |
Petrolimex Petrochemical and FPT Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrolimex Petrochemical and FPT Securities
The main advantage of trading using opposite Petrolimex Petrochemical and FPT Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex Petrochemical position performs unexpectedly, FPT Securities 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 FPT Securities will offset losses from the drop in FPT Securities' long position.| Petrolimex Petrochemical vs. FIT INVEST JSC | Petrolimex Petrochemical vs. Damsan JSC | Petrolimex Petrochemical vs. An Phat Plastic | Petrolimex Petrochemical vs. Alphanam ME |
| FPT Securities vs. FIT INVEST JSC | FPT Securities vs. Damsan JSC | FPT Securities vs. An Phat Plastic | FPT Securities vs. Alphanam ME |
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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