Correlation Between IRPC Public and Star Petroleum

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

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

Diversification Opportunities for IRPC Public and Star Petroleum

0.26

Correlation Coefficient

IRPC Public  Star Petroleum

Modest diversification

The 3 months correlation between IRPC and Star is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding IRPC Public and Star Petroleum Refining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Star Petroleum Refining and IRPC Public 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 IRPC Public are associated (or correlated) with Star Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Star Petroleum Refining has no effect on the direction of IRPC Public i.e., IRPC Public and Star Petroleum go up and down completely randomly.

Pair Corralation between IRPC Public and Star Petroleum

Assuming the 90 days trading horizon IRPC Public is expected to generate 59.26 times more return on investment than Star Petroleum. However, IRPC Public is 59.26 times more volatile than Star Petroleum Refining. It trades about 0.13 of its potential returns per unit of risk. Star Petroleum Refining is currently generating about -0.01 per unit of risk. If you would invest  0.00  in IRPC Public on September 3, 2024 and sell it today you would earn a total of  138.00  from holding IRPC Public or generate 9.223372036854776E16% return on investment over 90 days.

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

IRPC Public  vs.  Star Petroleum Refining

IRPC Public

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in IRPC Public are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. Despite quite conflicting forward-looking signals, IRPC Public disclosed solid returns over the last few months and may actually be approaching a breakup point.

Star Petroleum Refining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Star Petroleum Refining has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent forward-looking signals, Star Petroleum is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with IRPC Public and Star Petroleum

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

The idea behind IRPC Public and Star Petroleum Refining 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.

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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.