Correlation Between Pacific Petroleum and Pha Lai
Can any of the company-specific risk be diversified away by investing in both Pacific Petroleum and Pha Lai 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 Pha Lai 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 Pha Lai Thermal, you can compare the effects of market volatilities on Pacific Petroleum and Pha Lai 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 Pha Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Pha Lai.
Diversification Opportunities for Pacific Petroleum and Pha Lai
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Pacific and Pha is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and Pha Lai Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Lai Thermal 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 Pha Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Lai Thermal has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and Pha Lai go up and down completely randomly.
Pair Corralation between Pacific Petroleum and Pha Lai
Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to generate 1.11 times more return on investment than Pha Lai. However, Pacific Petroleum is 1.11 times more volatile than Pha Lai Thermal. It trades about 0.07 of its potential returns per unit of risk. Pha Lai Thermal is currently generating about -0.01 per unit of risk. If you would invest 1,208,174 in Pacific Petroleum Transportation on September 4, 2024 and sell it today you would earn a total of 411,826 from holding Pacific Petroleum Transportation or generate 34.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Pacific Petroleum Transportati vs. Pha Lai Thermal
Performance |
| Timeline |
| Pacific Petroleum |
| Pha Lai Thermal |
Pacific Petroleum and Pha Lai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Petroleum and Pha Lai
The main advantage of trading using opposite Pacific Petroleum and Pha Lai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Petroleum position performs unexpectedly, Pha Lai 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 Pha Lai will offset losses from the drop in Pha Lai's long position.| Pacific Petroleum vs. Alphanam ME | Pacific Petroleum vs. Hochiminh City Metal | Pacific Petroleum vs. Atesco Industrial Cartering | Pacific Petroleum vs. Danang Education Investment |
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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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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