Correlation Between Petrochemical and Bio View
Can any of the company-specific risk be diversified away by investing in both Petrochemical and Bio View 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 Petrochemical and Bio View into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrochemical and Bio View, you can compare the effects of market volatilities on Petrochemical and Bio View 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 Petrochemical with a short position of Bio View. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrochemical and Bio View.
Diversification Opportunities for Petrochemical and Bio View
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Petrochemical and Bio is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Petrochemical and Bio View in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio View and 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 Petrochemical are associated (or correlated) with Bio View. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio View has no effect on the direction of Petrochemical i.e., Petrochemical and Bio View go up and down completely randomly.
Pair Corralation between Petrochemical and Bio View
Assuming the 90 days trading horizon Petrochemical is expected to under-perform the Bio View. But the stock apears to be less risky and, when comparing its historical volatility, Petrochemical is 1.8 times less risky than Bio View. The stock trades about -0.11 of its potential returns per unit of risk. The Bio View is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 3,000 in Bio View on December 8, 2024 and sell it today you would earn a total of 90.00 from holding Bio View or generate 3.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrochemical vs. Bio View
Performance |
| Timeline |
| Petrochemical |
| Bio View |
Petrochemical and Bio View Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrochemical and Bio View
The main advantage of trading using opposite Petrochemical and Bio View positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrochemical position performs unexpectedly, Bio View 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 Bio View will offset losses from the drop in Bio View's long position.| Petrochemical vs. Imed Infinity Medical Limited | ||
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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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