Correlation Between Petrleos and Stepan
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By analyzing existing cross correlation between Petrleos Mexicanos 425 and Stepan Company, you can compare the effects of market volatilities on Petrleos and Stepan 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 Petrleos with a short position of Stepan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrleos and Stepan.
Diversification Opportunities for Petrleos and Stepan
Very good diversification
The 3 months correlation between Petrleos and Stepan is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding Petrleos Mexicanos 425 and Stepan Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stepan Company and Petrleos 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 Petrleos Mexicanos 425 are associated (or correlated) with Stepan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stepan Company has no effect on the direction of Petrleos i.e., Petrleos and Stepan go up and down completely randomly.
Pair Corralation between Petrleos and Stepan
Assuming the 90 days trading horizon Petrleos Mexicanos 425 is expected to generate 0.51 times more return on investment than Stepan. However, Petrleos Mexicanos 425 is 1.98 times less risky than Stepan. It trades about 0.0 of its potential returns per unit of risk. Stepan Company is currently generating about -0.03 per unit of risk. If you would invest 9,615 in Petrleos Mexicanos 425 on September 3, 2024 and sell it today you would lose (127.00) from holding Petrleos Mexicanos 425 or give up 1.32% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 99.39% |
| Values | Daily Returns |
Petrleos Mexicanos 425 vs. Stepan Company
Performance |
| Timeline |
| Petrleos Mexicanos 425 |
| Stepan Company |
Petrleos and Stepan Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrleos and Stepan
The main advantage of trading using opposite Petrleos and Stepan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrleos position performs unexpectedly, Stepan 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 Stepan will offset losses from the drop in Stepan's long position.The idea behind Petrleos Mexicanos 425 and Stepan Company 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.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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