Correlation Between Alphanam and Petrolimex Petrochemical

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

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

Diversification Opportunities for Alphanam and Petrolimex Petrochemical

0.84

Correlation Coefficient

Alphanam  Petrolimex Petrochemical

Very poor diversification

The 3 months correlation between Alphanam and Petrolimex is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Alphanam 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 Alphanam ME are associated (or correlated) with Petrolimex Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Petrochemical has no effect on the direction of Alphanam i.e., Alphanam and Petrolimex Petrochemical go up and down completely randomly.

Pair Corralation between Alphanam and Petrolimex Petrochemical

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the Petrolimex Petrochemical. In addition to that, Alphanam is 1.73 times more volatile than Petrolimex Petrochemical JSC. It trades about -0.06 of its total potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.07 per unit of volatility. If you would invest  2,120,000  in Petrolimex Petrochemical JSC on September 5, 2024 and sell it today you would earn a total of  70,000  from holding Petrolimex Petrochemical JSC or generate 3.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	50.0%
Values	Daily Returns

Alphanam ME  vs.  Petrolimex Petrochemical JSC

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Petrolimex Petrochemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrolimex Petrochemical JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Alphanam and Petrolimex Petrochemical

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

The idea behind Alphanam ME and Petrolimex Petrochemical 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.

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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.