Correlation Between Paz Oil and Bio View

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

By analyzing existing cross correlation between Paz Oil and Bio View, you can compare the effects of market volatilities on Paz Oil and Bio View 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 Paz Oil with a short position of Bio View. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paz Oil and Bio View.

Diversification Opportunities for Paz Oil and Bio View

-0.65

Correlation Coefficient

Paz Oil  Bio View

Excellent diversification

The 3 months correlation between Paz and Bio is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Paz Oil and Bio View in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bio View and Paz Oil 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 Paz Oil are associated (or correlated) with Bio View. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bio View has no effect on the direction of Paz Oil i.e., Paz Oil and Bio View go up and down completely randomly.

Pair Corralation between Paz Oil and Bio View

Assuming the 90 days trading horizon Paz Oil is expected to generate 0.44 times more return on investment than Bio View. However, Paz Oil is 2.28 times less risky than Bio View. It trades about 0.17 of its potential returns per unit of risk. Bio View is currently generating about 0.02 per unit of risk. If you would invest  5,300,000  in Paz Oil on May 4, 2025 and sell it today you would earn a total of  988,000  from holding Paz Oil or generate 18.64% return on investment over 90 days.

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

Paz Oil  vs.  Bio View

Paz Oil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Paz Oil are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat unfluctuating basic indicators, Paz Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Bio View

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Bio View are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Bio View may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with Paz Oil and Bio View

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

The idea behind Paz Oil and Bio View 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.