Correlation Between Ratio Oil and Salomon A

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

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

Diversification Opportunities for Ratio Oil and Salomon A

-0.54

Correlation Coefficient

Ratio Oil  Salomon A

Excellent diversification

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

Pair Corralation between Ratio Oil and Salomon A

Assuming the 90 days trading horizon Ratio Oil Explorations is expected to generate 0.57 times more return on investment than Salomon A. However, Ratio Oil Explorations is 1.76 times less risky than Salomon A. It trades about 0.38 of its potential returns per unit of risk. Salomon A Angel is currently generating about 0.11 per unit of risk. If you would invest  29,020  in Ratio Oil Explorations on August 25, 2024 and sell it today you would earn a total of  5,770  from holding Ratio Oil Explorations or generate 19.88% return on investment over 90 days.

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

Ratio Oil Explorations  vs.  Salomon A Angel

Ratio Oil Explorations

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Ratio Oil Explorations are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Ratio Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Salomon A Angel

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Salomon A Angel has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Pair Trading with Ratio Oil and Salomon A

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

The idea behind Ratio Oil Explorations and Salomon A Angel 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.