Correlation Between Petrolimex Information and Ducgiang Chemicals

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

By analyzing existing cross correlation between Petrolimex Information Technology and Ducgiang Chemicals Detergent, you can compare the effects of market volatilities on Petrolimex Information and Ducgiang Chemicals 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 Petrolimex Information with a short position of Ducgiang Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Information and Ducgiang Chemicals.

Diversification Opportunities for Petrolimex Information and Ducgiang Chemicals

0.12

Correlation Coefficient

Petrolimex Information  Ducgiang Chemicals

Average diversification

The 3 months correlation between Petrolimex and Ducgiang is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol and Ducgiang Chemicals Detergent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducgiang Chemicals and Petrolimex Information 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 Petrolimex Information Technology are associated (or correlated) with Ducgiang Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducgiang Chemicals has no effect on the direction of Petrolimex Information i.e., Petrolimex Information and Ducgiang Chemicals go up and down completely randomly.

Pair Corralation between Petrolimex Information and Ducgiang Chemicals

Assuming the 90 days trading horizon Petrolimex Information Technology is expected to under-perform the Ducgiang Chemicals. In addition to that, Petrolimex Information is 2.16 times more volatile than Ducgiang Chemicals Detergent. It trades about -0.06 of its total potential returns per unit of risk. Ducgiang Chemicals Detergent is currently generating about 0.06 per unit of volatility. If you would invest  10,912,400  in Ducgiang Chemicals Detergent on September 16, 2024 and sell it today you would earn a total of  577,600  from holding Ducgiang Chemicals Detergent or generate 5.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	71.21%
Values	Daily Returns

Petrolimex Information Technol  vs.  Ducgiang Chemicals Detergent

Petrolimex Information

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrolimex Information Technology has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Ducgiang Chemicals

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Ducgiang Chemicals Detergent are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Ducgiang Chemicals is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Petrolimex Information and Ducgiang Chemicals

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

The idea behind Petrolimex Information Technology and Ducgiang Chemicals Detergent 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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.