Correlation Between Sea Air and Materials Petroleum
Can any of the company-specific risk be diversified away by investing in both Sea Air and Materials 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 Sea Air and Materials Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sea Air Freight and Materials Petroleum JSC, you can compare the effects of market volatilities on Sea Air and Materials 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 Sea Air with a short position of Materials Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sea Air and Materials Petroleum.
Diversification Opportunities for Sea Air and Materials Petroleum
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Sea and Materials is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Sea Air Freight and Materials Petroleum JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Petroleum JSC and Sea Air 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 Sea Air Freight are associated (or correlated) with Materials Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Petroleum JSC has no effect on the direction of Sea Air i.e., Sea Air and Materials Petroleum go up and down completely randomly.
Pair Corralation between Sea Air and Materials Petroleum
Assuming the 90 days trading horizon Sea Air is expected to generate 3.81 times less return on investment than Materials Petroleum. But when comparing it to its historical volatility, Sea Air Freight is 2.96 times less risky than Materials Petroleum. It trades about 0.01 of its potential returns per unit of risk. Materials Petroleum JSC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 3,418,689 in Materials Petroleum JSC on October 30, 2024 and sell it today you would lose (473,689) from holding Materials Petroleum JSC or give up 13.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 59.07% |
| Values | Daily Returns |
Sea Air Freight vs. Materials Petroleum JSC
Performance |
| Timeline |
| Sea Air Freight |
| Materials Petroleum JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Sea Air and Materials Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sea Air and Materials Petroleum
The main advantage of trading using opposite Sea Air and Materials Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sea Air position performs unexpectedly, Materials 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 Materials Petroleum will offset losses from the drop in Materials Petroleum's long position.| Sea Air vs. BaoMinh Insurance Corp | Sea Air vs. Transimex Transportation JSC | Sea Air vs. Transport and Industry | Sea Air vs. Hai An Transport |
| Materials Petroleum vs. Binh Duong Construction | Materials Petroleum vs. Song Hong Construction | Materials Petroleum vs. Riverway Management JSC | Materials Petroleum vs. Elcom Technology Communications |
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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.
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