Correlation Between Pacific Petroleum and Nam Long

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

By analyzing existing cross correlation between Pacific Petroleum Transportation and Nam Long Investment, you can compare the effects of market volatilities on Pacific Petroleum and Nam Long 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 Pacific Petroleum with a short position of Nam Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Nam Long.

Diversification Opportunities for Pacific Petroleum and Nam Long

0.84

Correlation Coefficient

Pacific Petroleum  Nam Long

Very poor diversification

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

Pair Corralation between Pacific Petroleum and Nam Long

Assuming the 90 days trading horizon Pacific Petroleum is expected to generate 2.58 times less return on investment than Nam Long. But when comparing it to its historical volatility, Pacific Petroleum Transportation is 1.26 times less risky than Nam Long. It trades about 0.12 of its potential returns per unit of risk. Nam Long Investment is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest  3,029,686  in Nam Long Investment on May 7, 2025 and sell it today you would earn a total of  1,145,314  from holding Nam Long Investment or generate 37.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.46%
Values	Daily Returns

Pacific Petroleum Transportati  vs.  Nam Long Investment

Pacific Petroleum

Risk-Adjusted Performance

Fair

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Petroleum Transportation are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pacific Petroleum may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Nam Long Investment

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Nam Long Investment are ranked lower than 19 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Nam Long displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Pacific Petroleum and Nam Long

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

The idea behind Pacific Petroleum Transportation and Nam Long Investment 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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.