Correlation Between Asia Pacific and Chevron Corp
Can any of the company-specific risk be diversified away by investing in both Asia Pacific and Chevron Corp 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 Asia Pacific and Chevron Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Pacific Fibers and Chevron Corp, you can compare the effects of market volatilities on Asia Pacific and Chevron Corp 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 Asia Pacific with a short position of Chevron Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Pacific and Chevron Corp.
Diversification Opportunities for Asia Pacific and Chevron Corp
-0.42 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Asia and Chevron is -0.42. Overlapping area represents the amount of risk that can be diversified away by holding Asia Pacific Fibers and Chevron Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Chevron Corp and Asia Pacific 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 Asia Pacific Fibers are associated (or correlated) with Chevron Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Chevron Corp has no effect on the direction of Asia Pacific i.e., Asia Pacific and Chevron Corp go up and down completely randomly.
Pair Corralation between Asia Pacific and Chevron Corp
Assuming the 90 days trading horizon Asia Pacific Fibers is expected to under-perform the Chevron Corp. In addition to that, Asia Pacific is 1.47 times more volatile than Chevron Corp. It trades about -0.1 of its total potential returns per unit of risk. Chevron Corp is currently generating about 0.0 per unit of volatility. If you would invest 16,348 in Chevron Corp on January 20, 2024 and sell it today you would lose (591.00) from holding Chevron Corp or give up 3.62% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.05% |
| Values | Daily Returns |
Asia Pacific Fibers vs. Chevron Corp
Performance |
| Timeline |
| Asia Pacific Fibers |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Chevron Corp |
Asia Pacific and Chevron Corp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Pacific and Chevron Corp
The main advantage of trading using opposite Asia Pacific and Chevron Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Pacific position performs unexpectedly, Chevron Corp 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 Chevron Corp will offset losses from the drop in Chevron Corp's long position.The idea behind Asia Pacific Fibers and Chevron Corp 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 CEOs Directory module to screen CEOs from public companies around the world.
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