Correlation Between Petrochemical and Photomyne
Can any of the company-specific risk be diversified away by investing in both Petrochemical and Photomyne 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 Photomyne into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrochemical and Photomyne, you can compare the effects of market volatilities on Petrochemical and Photomyne 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 Photomyne. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrochemical and Photomyne.
Diversification Opportunities for Petrochemical and Photomyne
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Petrochemical and Photomyne is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Petrochemical and Photomyne in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Photomyne 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 Photomyne. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Photomyne has no effect on the direction of Petrochemical i.e., Petrochemical and Photomyne go up and down completely randomly.
Pair Corralation between Petrochemical and Photomyne
Assuming the 90 days trading horizon Petrochemical is expected to generate 2.13 times more return on investment than Photomyne. However, Petrochemical is 2.13 times more volatile than Photomyne. It trades about -0.04 of its potential returns per unit of risk. Photomyne is currently generating about -0.14 per unit of risk. If you would invest 20,410 in Petrochemical on September 1, 2024 and sell it today you would lose (330.00) from holding Petrochemical or give up 1.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrochemical vs. Photomyne
Performance |
| Timeline |
| Petrochemical |
| Photomyne |
Petrochemical and Photomyne Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrochemical and Photomyne
The main advantage of trading using opposite Petrochemical and Photomyne positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrochemical position performs unexpectedly, Photomyne 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 Photomyne will offset losses from the drop in Photomyne's long position.| Petrochemical vs. Brainsway | Petrochemical vs. Mivne Real Estate | Petrochemical vs. Photomyne | Petrochemical vs. Israel Land Development |
| Photomyne vs. Clal Biotechnology Industries | Photomyne vs. Hiron Trade Investments Industrial | Photomyne vs. Millennium Food Tech LP | Photomyne vs. Retailors |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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