Correlation Between Petrochemical and Strauss
Can any of the company-specific risk be diversified away by investing in both Petrochemical and Strauss 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 Strauss into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrochemical and Strauss Group, you can compare the effects of market volatilities on Petrochemical and Strauss 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 Strauss. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrochemical and Strauss.
Diversification Opportunities for Petrochemical and Strauss
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petrochemical and Strauss is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Petrochemical and Strauss Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strauss Group 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 Strauss. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strauss Group has no effect on the direction of Petrochemical i.e., Petrochemical and Strauss go up and down completely randomly.
Pair Corralation between Petrochemical and Strauss
Assuming the 90 days trading horizon Petrochemical is expected to generate 1.77 times more return on investment than Strauss. However, Petrochemical is 1.77 times more volatile than Strauss Group. It trades about 0.05 of its potential returns per unit of risk. Strauss Group is currently generating about 0.01 per unit of risk. If you would invest 14,120 in Petrochemical on November 27, 2024 and sell it today you would earn a total of 8,110 from holding Petrochemical or generate 57.44% 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. Strauss Group
Performance |
| Timeline |
| Petrochemical |
| Strauss Group |
Petrochemical and Strauss Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrochemical and Strauss
The main advantage of trading using opposite Petrochemical and Strauss positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrochemical position performs unexpectedly, Strauss 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 Strauss will offset losses from the drop in Strauss' long position.| Petrochemical vs. Rapac Communication Infrastructure | Petrochemical vs. Skyline Investments | Petrochemical vs. Teuza A Fairchild | Petrochemical vs. Ormat Technologies |
| Strauss vs. Shufersal | Strauss vs. Israel Discount Bank | Strauss vs. Bank Leumi Le Israel | Strauss vs. Azrieli Group |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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