Correlation Between Petrolimex International and Bentre Aquaproduct

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

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

Diversification Opportunities for Petrolimex International and Bentre Aquaproduct

0.66

Correlation Coefficient

Petrolimex International  Bentre Aquaproduct

Poor diversification

The 3 months correlation between Petrolimex and Bentre is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex International Tradi and Bentre Aquaproduct Import in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bentre Aquaproduct Import and Petrolimex International 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 International Trading are associated (or correlated) with Bentre Aquaproduct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bentre Aquaproduct Import has no effect on the direction of Petrolimex International i.e., Petrolimex International and Bentre Aquaproduct go up and down completely randomly.

Pair Corralation between Petrolimex International and Bentre Aquaproduct

Assuming the 90 days trading horizon Petrolimex International Trading is expected to generate 2.06 times more return on investment than Bentre Aquaproduct. However, Petrolimex International is 2.06 times more volatile than Bentre Aquaproduct Import. It trades about -0.02 of its potential returns per unit of risk. Bentre Aquaproduct Import is currently generating about -0.16 per unit of risk. If you would invest  555,000  in Petrolimex International Trading on September 15, 2024 and sell it today you would lose (24,000) from holding Petrolimex International Trading or give up 4.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	90.16%
Values	Daily Returns

Petrolimex International Tradi  vs.  Bentre Aquaproduct Import

Petrolimex International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrolimex International Trading has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Bentre Aquaproduct Import

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bentre Aquaproduct Import 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.

Pair Trading with Petrolimex International and Bentre Aquaproduct

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

The idea behind Petrolimex International Trading and Bentre Aquaproduct Import 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..