Correlation Between Petrolimex Insurance and IDJ FINANCIAL

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

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

Diversification Opportunities for Petrolimex Insurance and IDJ FINANCIAL

-0.54

Correlation Coefficient

Petrolimex Insurance  IDJ FINANCIAL

Excellent diversification

The 3 months correlation between Petrolimex and IDJ is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Insurance Corp and IDJ FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDJ FINANCIAL and Petrolimex Insurance 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 Insurance Corp are associated (or correlated) with IDJ FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDJ FINANCIAL has no effect on the direction of Petrolimex Insurance i.e., Petrolimex Insurance and IDJ FINANCIAL go up and down completely randomly.

Pair Corralation between Petrolimex Insurance and IDJ FINANCIAL

Assuming the 90 days trading horizon Petrolimex Insurance Corp is expected to under-perform the IDJ FINANCIAL. But the stock apears to be less risky and, when comparing its historical volatility, Petrolimex Insurance Corp is 2.13 times less risky than IDJ FINANCIAL. The stock trades about -0.07 of its potential returns per unit of risk. The IDJ FINANCIAL is currently generating about 0.28 of returns per unit of risk over similar time horizon. If you would invest  410,000  in IDJ FINANCIAL on May 7, 2025 and sell it today you would earn a total of  360,000  from holding IDJ FINANCIAL or generate 87.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Petrolimex Insurance Corp  vs.  IDJ FINANCIAL

Petrolimex Insurance Corp

Risk-Adjusted Performance

Weakest

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

IDJ FINANCIAL

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in IDJ FINANCIAL are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward-looking indicators, IDJ FINANCIAL displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrolimex Insurance and IDJ FINANCIAL

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

The idea behind Petrolimex Insurance Corp and IDJ FINANCIAL 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.