Correlation Between Petrolimex Petrochemical and Mechanics Construction
Can any of the company-specific risk be diversified away by investing in both Petrolimex Petrochemical and Mechanics 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 Petrochemical and Mechanics Construction 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 Mechanics Construction and, you can compare the effects of market volatilities on Petrolimex Petrochemical and Mechanics 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 Petrochemical with a short position of Mechanics Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Petrochemical and Mechanics Construction.
Diversification Opportunities for Petrolimex Petrochemical and Mechanics Construction
-0.15 | Correlation Coefficient |
Good diversification
The 3 months correlation between Petrolimex and Mechanics is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Petrochemical JSC and Mechanics Construction and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechanics Construction 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 Mechanics Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechanics Construction has no effect on the direction of Petrolimex Petrochemical i.e., Petrolimex Petrochemical and Mechanics Construction go up and down completely randomly.
Pair Corralation between Petrolimex Petrochemical and Mechanics Construction
Assuming the 90 days trading horizon Petrolimex Petrochemical JSC is expected to generate 2.71 times more return on investment than Mechanics Construction. However, Petrolimex Petrochemical is 2.71 times more volatile than Mechanics Construction and. It trades about 0.18 of its potential returns per unit of risk. Mechanics Construction and is currently generating about 0.23 per unit of risk. If you would invest 2,050,000 in Petrolimex Petrochemical JSC on October 30, 2024 and sell it today you would earn a total of 410,000 from holding Petrolimex Petrochemical JSC or generate 20.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 51.22% |
| Values | Daily Returns |
Petrolimex Petrochemical JSC vs. Mechanics Construction and
Performance |
| Timeline |
| Petrolimex Petrochemical |
| Mechanics Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Petrolimex Petrochemical and Mechanics Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrolimex Petrochemical and Mechanics Construction
The main advantage of trading using opposite Petrolimex Petrochemical and Mechanics Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex Petrochemical position performs unexpectedly, Mechanics 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 Mechanics Construction will offset losses from the drop in Mechanics Construction's long position.The idea behind Petrolimex Petrochemical JSC and Mechanics Construction and 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.
| Mechanics Construction vs. FIT INVEST JSC | Mechanics Construction vs. Damsan JSC | Mechanics Construction vs. An Phat Plastic | Mechanics Construction 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
Other Complementary Tools
| 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 | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios |