Correlation Between PXP Energy and Oriental Petroleum
Can any of the company-specific risk be diversified away by investing in both PXP Energy and Oriental Petroleum 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 PXP Energy and Oriental Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PXP Energy Corp and Oriental Petroleum and, you can compare the effects of market volatilities on PXP Energy and Oriental Petroleum 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 PXP Energy with a short position of Oriental Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of PXP Energy and Oriental Petroleum.
Diversification Opportunities for PXP Energy and Oriental Petroleum
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between PXP and Oriental is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding PXP Energy Corp and Oriental Petroleum and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oriental Petroleum and and PXP Energy 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 PXP Energy Corp are associated (or correlated) with Oriental Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oriental Petroleum and has no effect on the direction of PXP Energy i.e., PXP Energy and Oriental Petroleum go up and down completely randomly.
Pair Corralation between PXP Energy and Oriental Petroleum
Assuming the 90 days trading horizon PXP Energy Corp is expected to generate 1.64 times more return on investment than Oriental Petroleum. However, PXP Energy is 1.64 times more volatile than Oriental Petroleum and. It trades about 0.0 of its potential returns per unit of risk. Oriental Petroleum and is currently generating about -0.04 per unit of risk. If you would invest 320.00 in PXP Energy Corp on September 1, 2024 and sell it today you would lose (31.00) from holding PXP Energy Corp or give up 9.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.52% |
| Values | Daily Returns |
PXP Energy Corp vs. Oriental Petroleum and
Performance |
| Timeline |
| PXP Energy Corp |
| Oriental Petroleum and |
PXP Energy and Oriental Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PXP Energy and Oriental Petroleum
The main advantage of trading using opposite PXP Energy and Oriental Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PXP Energy position performs unexpectedly, Oriental Petroleum 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 Oriental Petroleum will offset losses from the drop in Oriental Petroleum's long position.| PXP Energy vs. SM Investments Corp | PXP Energy vs. San Miguel Pure | PXP Energy vs. Ayala Corp | PXP Energy vs. Ayala Land |
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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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