Correlation Between Pacific Petroleum and Ducgiang Chemicals
Can any of the company-specific risk be diversified away by investing in both Pacific Petroleum and Ducgiang Chemicals 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 Pacific Petroleum and Ducgiang Chemicals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Petroleum Transportation and Ducgiang Chemicals Detergent, you can compare the effects of market volatilities on Pacific Petroleum and Ducgiang Chemicals 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 Pacific Petroleum with a short position of Ducgiang Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Ducgiang Chemicals.
Diversification Opportunities for Pacific Petroleum and Ducgiang Chemicals
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pacific and Ducgiang is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and Ducgiang Chemicals Detergent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducgiang Chemicals and Pacific Petroleum 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 Pacific Petroleum Transportation are associated (or correlated) with Ducgiang Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducgiang Chemicals has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and Ducgiang Chemicals go up and down completely randomly.
Pair Corralation between Pacific Petroleum and Ducgiang Chemicals
Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to under-perform the Ducgiang Chemicals. In addition to that, Pacific Petroleum is 2.27 times more volatile than Ducgiang Chemicals Detergent. It trades about -0.14 of its total potential returns per unit of risk. Ducgiang Chemicals Detergent is currently generating about -0.24 per unit of volatility. If you would invest 11,700,000 in Ducgiang Chemicals Detergent on October 28, 2024 and sell it today you would lose (560,000) from holding Ducgiang Chemicals Detergent or give up 4.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Pacific Petroleum Transportati vs. Ducgiang Chemicals Detergent
Performance |
| Timeline |
| Pacific Petroleum |
| Ducgiang Chemicals |
Pacific Petroleum and Ducgiang Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Petroleum and Ducgiang Chemicals
The main advantage of trading using opposite Pacific Petroleum and Ducgiang Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Petroleum position performs unexpectedly, Ducgiang Chemicals 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 Ducgiang Chemicals will offset losses from the drop in Ducgiang Chemicals' long position.| Pacific Petroleum vs. Ducgiang Chemicals Detergent | Pacific Petroleum vs. Vincom Retail JSC | Pacific Petroleum vs. BaoMinh Insurance Corp | Pacific Petroleum vs. Saigon Beer Alcohol |
| Ducgiang Chemicals vs. Thong Nhat Rubber | Ducgiang Chemicals vs. Industrial Urban Development | Ducgiang Chemicals vs. Fecon Mining JSC | Ducgiang Chemicals vs. Materials Petroleum JSC |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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