Correlation Between Tienlen Steel and Pacific Petroleum
Can any of the company-specific risk be diversified away by investing in both Tienlen Steel and Pacific 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 Tienlen Steel and Pacific Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tienlen Steel Corp and Pacific Petroleum Transportation, you can compare the effects of market volatilities on Tienlen Steel and Pacific 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 Tienlen Steel with a short position of Pacific Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and Pacific Petroleum.
Diversification Opportunities for Tienlen Steel and Pacific Petroleum
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tienlen and Pacific is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and Pacific Petroleum Transportati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Petroleum and Tienlen Steel 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 Tienlen Steel Corp are associated (or correlated) with Pacific Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Petroleum has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and Pacific Petroleum go up and down completely randomly.
Pair Corralation between Tienlen Steel and Pacific Petroleum
Assuming the 90 days trading horizon Tienlen Steel Corp is expected to under-perform the Pacific Petroleum. In addition to that, Tienlen Steel is 1.07 times more volatile than Pacific Petroleum Transportation. It trades about -0.35 of its total potential returns per unit of risk. Pacific Petroleum Transportation is currently generating about 0.14 per unit of volatility. If you would invest 1,570,000 in Pacific Petroleum Transportation on September 4, 2024 and sell it today you would earn a total of 50,000 from holding Pacific Petroleum Transportation or generate 3.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Tienlen Steel Corp vs. Pacific Petroleum Transportati
Performance |
| Timeline |
| Tienlen Steel Corp |
| Pacific Petroleum |
Tienlen Steel and Pacific Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tienlen Steel and Pacific Petroleum
The main advantage of trading using opposite Tienlen Steel and Pacific Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tienlen Steel position performs unexpectedly, Pacific 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 Pacific Petroleum will offset losses from the drop in Pacific Petroleum's long position.| Tienlen Steel vs. FIT INVEST JSC | Tienlen Steel vs. Damsan JSC | Tienlen Steel vs. An Phat Plastic | Tienlen Steel vs. Alphanam ME |
| Pacific Petroleum vs. Alphanam ME | Pacific Petroleum vs. Hochiminh City Metal | Pacific Petroleum vs. Atesco Industrial Cartering | Pacific Petroleum vs. Danang Education Investment |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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