Correlation Between Oil Terminal and IM Vinaria

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

By analyzing existing cross correlation between Oil Terminal C and IM Vinaria Purcari, you can compare the effects of market volatilities on Oil Terminal and IM Vinaria 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 Oil Terminal with a short position of IM Vinaria. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oil Terminal and IM Vinaria.

Diversification Opportunities for Oil Terminal and IM Vinaria

0.25

Correlation Coefficient

Oil Terminal  IM Vinaria

Modest diversification

The 3 months correlation between Oil and WINE is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Oil Terminal C and IM Vinaria Purcari in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IM Vinaria Purcari and Oil Terminal 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 Oil Terminal C are associated (or correlated) with IM Vinaria. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IM Vinaria Purcari has no effect on the direction of Oil Terminal i.e., Oil Terminal and IM Vinaria go up and down completely randomly.

Pair Corralation between Oil Terminal and IM Vinaria

Assuming the 90 days trading horizon Oil Terminal C is expected to under-perform the IM Vinaria. In addition to that, Oil Terminal is 1.73 times more volatile than IM Vinaria Purcari. It trades about -0.1 of its total potential returns per unit of risk. IM Vinaria Purcari is currently generating about 0.03 per unit of volatility. If you would invest  1,490  in IM Vinaria Purcari on September 15, 2024 and sell it today you would earn a total of  10.00  from holding IM Vinaria Purcari or generate 0.67% return on investment over 90 days.

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

Oil Terminal C  vs.  IM Vinaria Purcari

Oil Terminal C

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Oil Terminal C has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy essential indicators, Oil Terminal is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

IM Vinaria Purcari

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in IM Vinaria Purcari are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, IM Vinaria is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Oil Terminal and IM Vinaria

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

The idea behind Oil Terminal C and IM Vinaria Purcari 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.