Correlation Between Pacific Petroleum and Fecon Mining
Can any of the company-specific risk be diversified away by investing in both Pacific Petroleum and Fecon Mining 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 Fecon Mining 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 Fecon Mining JSC, you can compare the effects of market volatilities on Pacific Petroleum and Fecon Mining 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 Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Fecon Mining.
Diversification Opportunities for Pacific Petroleum and Fecon Mining
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pacific and Fecon is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC 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 Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and Fecon Mining go up and down completely randomly.
Pair Corralation between Pacific Petroleum and Fecon Mining
Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to generate 0.96 times more return on investment than Fecon Mining. However, Pacific Petroleum Transportation is 1.04 times less risky than Fecon Mining. It trades about 0.07 of its potential returns per unit of risk. Fecon Mining JSC is currently generating about -0.02 per unit of risk. If you would invest 1,024,418 in Pacific Petroleum Transportation on August 31, 2024 and sell it today you would earn a total of 600,582 from holding Pacific Petroleum Transportation or generate 58.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Petroleum Transportati vs. Fecon Mining JSC
Performance |
| Timeline |
| Pacific Petroleum |
| Fecon Mining JSC |
Pacific Petroleum and Fecon Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Petroleum and Fecon Mining
The main advantage of trading using opposite Pacific Petroleum and Fecon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Petroleum position performs unexpectedly, Fecon Mining 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 Fecon Mining will offset losses from the drop in Fecon Mining's long position.| Pacific Petroleum vs. Taseco Air Services | Pacific Petroleum vs. Industrial Urban Development | Pacific Petroleum vs. RangDong Plastic JSC | Pacific Petroleum vs. Sao Vang Rubber |
| Fecon Mining vs. PVI Reinsurance Corp | Fecon Mining vs. PetroVietnam Drilling Well | Fecon Mining vs. Petrolimex Petrochemical JSC | Fecon Mining vs. Hochiminh City Metal |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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