Correlation Between Din Capital and Petrolimex International

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

By analyzing existing cross correlation between Din Capital Investment and Petrolimex International Trading, you can compare the effects of market volatilities on Din Capital and Petrolimex International 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 Din Capital with a short position of Petrolimex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Din Capital and Petrolimex International.

Diversification Opportunities for Din Capital and Petrolimex International

0.19

Correlation Coefficient

Din Capital  Petrolimex International

Average diversification

The 3 months correlation between Din and Petrolimex is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Din Capital Investment and Petrolimex International Tradi in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex International and Din Capital 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 Din Capital Investment are associated (or correlated) with Petrolimex International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex International has no effect on the direction of Din Capital i.e., Din Capital and Petrolimex International go up and down completely randomly.

Pair Corralation between Din Capital and Petrolimex International

Assuming the 90 days trading horizon Din Capital Investment is expected to generate 0.84 times more return on investment than Petrolimex International. However, Din Capital Investment is 1.2 times less risky than Petrolimex International. It trades about 0.14 of its potential returns per unit of risk. Petrolimex International Trading is currently generating about 0.01 per unit of risk. If you would invest  890,000  in Din Capital Investment on September 29, 2024 and sell it today you would earn a total of  130,000  from holding Din Capital Investment or generate 14.61% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.36%
Values	Daily Returns

Din Capital Investment  vs.  Petrolimex International Tradi

Din Capital Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Din Capital Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Din Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Petrolimex International

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex International Trading are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Petrolimex International is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Din Capital and Petrolimex International

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

The idea behind Din Capital Investment and Petrolimex International Trading 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.