Correlation Between Space and Bazan Oil
Can any of the company-specific risk be diversified away by investing in both Space and Bazan Oil 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 Space and Bazan Oil into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Space Com and Bazan Oil Refineries, you can compare the effects of market volatilities on Space and Bazan Oil 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 Space with a short position of Bazan Oil. Check out your portfolio center. Please also check ongoing floating volatility patterns of Space and Bazan Oil.
Diversification Opportunities for Space and Bazan Oil
Very good diversification
The 3 months correlation between Space and Bazan is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Space Com and Bazan Oil Refineries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bazan Oil Refineries and Space 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 Space Com are associated (or correlated) with Bazan Oil. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bazan Oil Refineries has no effect on the direction of Space i.e., Space and Bazan Oil go up and down completely randomly.
Pair Corralation between Space and Bazan Oil
Assuming the 90 days trading horizon Space Com is expected to generate 1.14 times more return on investment than Bazan Oil. However, Space is 1.14 times more volatile than Bazan Oil Refineries. It trades about -0.08 of its potential returns per unit of risk. Bazan Oil Refineries is currently generating about -0.45 per unit of risk. If you would invest 5,850 in Space Com on January 19, 2024 and sell it today you would lose (350.00) from holding Space Com or give up 5.98% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Space Com vs. Bazan Oil Refineries
Performance |
| Timeline |
| Space Com |
| Bazan Oil Refineries |
Space and Bazan Oil Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Space and Bazan Oil
The main advantage of trading using opposite Space and Bazan Oil positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Space position performs unexpectedly, Bazan Oil 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 Bazan Oil will offset losses from the drop in Bazan Oil's long position.| Space vs. Bezeq Israeli Telecommunication | Space vs. Tower Semiconductor | Space vs. El Al Israel | Space vs. Kamada |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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