Correlation Between Vincom Retail and Materials Petroleum

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

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

Diversification Opportunities for Vincom Retail and Materials Petroleum

-0.05

Correlation Coefficient

Vincom Retail  Materials Petroleum

Good diversification

The 3 months correlation between Vincom and Materials is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Vincom Retail JSC and Materials Petroleum JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Materials Petroleum JSC and Vincom Retail 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 Vincom Retail JSC are associated (or correlated) with Materials Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Materials Petroleum JSC has no effect on the direction of Vincom Retail i.e., Vincom Retail and Materials Petroleum go up and down completely randomly.

Pair Corralation between Vincom Retail and Materials Petroleum

Assuming the 90 days trading horizon Vincom Retail JSC is expected to under-perform the Materials Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, Vincom Retail JSC is 2.81 times less risky than Materials Petroleum. The stock trades about -0.03 of its potential returns per unit of risk. The Materials Petroleum JSC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,700,000  in Materials Petroleum JSC on September 13, 2024 and sell it today you would earn a total of  150,000  from holding Materials Petroleum JSC or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	79.69%
Values	Daily Returns

Vincom Retail JSC  vs.  Materials Petroleum JSC

Vincom Retail JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Materials Petroleum JSC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Materials Petroleum JSC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Materials Petroleum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vincom Retail and Materials Petroleum

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

The idea behind Vincom Retail JSC and Materials Petroleum JSC 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.

Check out your portfolio center.

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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.