Correlation Between OPC Energy and Naphtha
Can any of the company-specific risk be diversified away by investing in both OPC Energy and Naphtha 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 OPC Energy and Naphtha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between OPC Energy and Naphtha, you can compare the effects of market volatilities on OPC Energy and Naphtha 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 OPC Energy with a short position of Naphtha. Check out your portfolio center. Please also check ongoing floating volatility patterns of OPC Energy and Naphtha.
Diversification Opportunities for OPC Energy and Naphtha
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between OPC and Naphtha is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding OPC Energy and Naphtha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naphtha and OPC Energy 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 OPC Energy are associated (or correlated) with Naphtha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Naphtha has no effect on the direction of OPC Energy i.e., OPC Energy and Naphtha go up and down completely randomly.
Pair Corralation between OPC Energy and Naphtha
Assuming the 90 days trading horizon OPC Energy is expected to generate 1.26 times more return on investment than Naphtha. However, OPC Energy is 1.26 times more volatile than Naphtha. It trades about 0.16 of its potential returns per unit of risk. Naphtha is currently generating about -0.12 per unit of risk. If you would invest 265,000 in OPC Energy on January 26, 2024 and sell it today you would earn a total of 20,000 from holding OPC Energy or generate 7.55% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
OPC Energy vs. Naphtha
Performance |
Timeline |
OPC Energy |
Naphtha |
OPC Energy and Naphtha Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with OPC Energy and Naphtha
The main advantage of trading using opposite OPC Energy and Naphtha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if OPC Energy position performs unexpectedly, Naphtha 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 Naphtha will offset losses from the drop in Naphtha's long position.OPC Energy vs. Energix Renewable Energies | OPC Energy vs. Doral Group Renewable | OPC Energy vs. Elbit Systems | OPC Energy vs. Electreon Wireless |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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