Correlation Between Amir Marketing and Petrochemical

Can any of the company-specific risk be diversified away by investing in both Amir Marketing and Petrochemical 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 Amir Marketing and Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amir Marketing and and Petrochemical, you can compare the effects of market volatilities on Amir Marketing and Petrochemical 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 Amir Marketing with a short position of Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amir Marketing and Petrochemical.

Diversification Opportunities for Amir Marketing and Petrochemical

0.46

Correlation Coefficient

Amir Marketing  Petrochemical

Very weak diversification

The 3 months correlation between Amir and Petrochemical is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Amir Marketing and and Petrochemical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrochemical and Amir Marketing 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 Amir Marketing and are associated (or correlated) with Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrochemical has no effect on the direction of Amir Marketing i.e., Amir Marketing and Petrochemical go up and down completely randomly.

Pair Corralation between Amir Marketing and Petrochemical

Assuming the 90 days trading horizon Amir Marketing is expected to generate 1.68 times less return on investment than Petrochemical. But when comparing it to its historical volatility, Amir Marketing and is 1.28 times less risky than Petrochemical. It trades about 0.07 of its potential returns per unit of risk. Petrochemical is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  14,750  in Petrochemical on September 26, 2024 and sell it today you would earn a total of  3,450  from holding Petrochemical or generate 23.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Amir Marketing and  vs.  Petrochemical

Amir Marketing

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amir Marketing and are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Amir Marketing may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Petrochemical

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Petrochemical has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Petrochemical is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Amir Marketing and Petrochemical

The main advantage of trading using opposite Amir Marketing and Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amir Marketing position performs unexpectedly, Petrochemical 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 Petrochemical will offset losses from the drop in Petrochemical's long position.

The idea behind Amir Marketing and and Petrochemical 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.