Correlation Between Star Petroleum and Power Solution
Can any of the company-specific risk be diversified away by investing in both Star Petroleum and Power Solution 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 Star Petroleum and Power Solution into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Star Petroleum Refining and Power Solution Technologies, you can compare the effects of market volatilities on Star Petroleum and Power Solution 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 Star Petroleum with a short position of Power Solution. Check out your portfolio center. Please also check ongoing floating volatility patterns of Star Petroleum and Power Solution.
Diversification Opportunities for Star Petroleum and Power Solution
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Star and Power is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Star Petroleum Refining and Power Solution Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Solution Techn and Star 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 Star Petroleum Refining are associated (or correlated) with Power Solution. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Solution Techn has no effect on the direction of Star Petroleum i.e., Star Petroleum and Power Solution go up and down completely randomly.
Pair Corralation between Star Petroleum and Power Solution
Assuming the 90 days trading horizon Star Petroleum Refining is expected to under-perform the Power Solution. But the stock apears to be less risky and, when comparing its historical volatility, Star Petroleum Refining is 22.4 times less risky than Power Solution. The stock trades about -0.04 of its potential returns per unit of risk. The Power Solution Technologies is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 161.00 in Power Solution Technologies on August 28, 2024 and sell it today you would lose (117.00) from holding Power Solution Technologies or give up 72.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Star Petroleum Refining vs. Power Solution Technologies
Performance |
| Timeline |
| Star Petroleum Refining |
| Power Solution Techn |
Star Petroleum and Power Solution Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Star Petroleum and Power Solution
The main advantage of trading using opposite Star Petroleum and Power Solution positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Star Petroleum position performs unexpectedly, Power Solution 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 Power Solution will offset losses from the drop in Power Solution's long position.The idea behind Star Petroleum Refining and Power Solution Technologies pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Power Solution vs. WHA Public | Power Solution vs. Siri Prime Office | Power Solution vs. Ananda Development Public | Power Solution vs. Bangkok Land Public |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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