Correlation Between Tamar Petroleum and Naphtha
Can any of the company-specific risk be diversified away by investing in both Tamar Petroleum 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 Tamar Petroleum and Naphtha into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tamar Petroleum and Naphtha, you can compare the effects of market volatilities on Tamar Petroleum 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 Tamar Petroleum with a short position of Naphtha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tamar Petroleum and Naphtha.
Diversification Opportunities for Tamar Petroleum and Naphtha
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Tamar and Naphtha is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Tamar Petroleum and Naphtha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Naphtha and Tamar 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 Tamar Petroleum 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 Tamar Petroleum i.e., Tamar Petroleum and Naphtha go up and down completely randomly.
Pair Corralation between Tamar Petroleum and Naphtha
Assuming the 90 days trading horizon Tamar Petroleum is expected to generate 1.59 times more return on investment than Naphtha. However, Tamar Petroleum is 1.59 times more volatile than Naphtha. It trades about 0.11 of its potential returns per unit of risk. Naphtha is currently generating about 0.05 per unit of risk. If you would invest 199,799 in Tamar Petroleum on January 20, 2024 and sell it today you would earn a total of 31,501 from holding Tamar Petroleum or generate 15.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tamar Petroleum vs. Naphtha
Performance |
| Timeline |
| Tamar Petroleum |
| Naphtha |
Tamar Petroleum and Naphtha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tamar Petroleum and Naphtha
The main advantage of trading using opposite Tamar Petroleum and Naphtha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tamar Petroleum 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.| Tamar Petroleum vs. Fattal 1998 Holdings | Tamar Petroleum vs. El Al Israel | Tamar Petroleum vs. Bank Leumi Le Israel | Tamar Petroleum vs. Teva Pharmaceutical Industries |
| Naphtha vs. Fattal 1998 Holdings | Naphtha vs. El Al Israel | Naphtha vs. Bank Leumi Le Israel | Naphtha vs. Teva Pharmaceutical Industries |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |