Correlation Between Tamar Petroleum and OPC Energy
Can any of the company-specific risk be diversified away by investing in both Tamar Petroleum and OPC Energy 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 OPC Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tamar Petroleum and OPC Energy, you can compare the effects of market volatilities on Tamar Petroleum and OPC Energy 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 OPC Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tamar Petroleum and OPC Energy.
Diversification Opportunities for Tamar Petroleum and OPC Energy
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Tamar and OPC is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Tamar Petroleum and OPC Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPC Energy 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 OPC Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPC Energy has no effect on the direction of Tamar Petroleum i.e., Tamar Petroleum and OPC Energy go up and down completely randomly.
Pair Corralation between Tamar Petroleum and OPC Energy
Assuming the 90 days trading horizon Tamar Petroleum is expected to under-perform the OPC Energy. But the stock apears to be less risky and, when comparing its historical volatility, Tamar Petroleum is 1.35 times less risky than OPC Energy. The stock trades about -0.17 of its potential returns per unit of risk. The OPC Energy is currently generating about 0.16 of returns per unit of risk over similar time horizon. 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 | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tamar Petroleum vs. OPC Energy
Performance |
| Timeline |
| Tamar Petroleum |
| OPC Energy |
Tamar Petroleum and OPC Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tamar Petroleum and OPC Energy
The main advantage of trading using opposite Tamar Petroleum and OPC Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tamar Petroleum position performs unexpectedly, OPC Energy 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 OPC Energy will offset losses from the drop in OPC Energy's long position.| Tamar Petroleum vs. Delek Group | Tamar Petroleum vs. NewMed Energy | Tamar Petroleum vs. Fattal 1998 Holdings | Tamar Petroleum vs. Bazan Oil Refineries |
| OPC Energy vs. Energix Renewable Energies | OPC Energy vs. Doral Group Renewable | OPC Energy vs. Elbit Systems | OPC Energy vs. Electreon Wireless |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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