Correlation Between Paz Oil and Safe T

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

By analyzing existing cross correlation between Paz Oil and Safe T Group, you can compare the effects of market volatilities on Paz Oil and Safe T 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 Paz Oil with a short position of Safe T. Check out your portfolio center. Please also check ongoing floating volatility patterns of Paz Oil and Safe T.

Diversification Opportunities for Paz Oil and Safe T

0.84

Correlation Coefficient

Paz Oil  Safe T

Very poor diversification

The 3 months correlation between Paz and Safe is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Paz Oil and Safe T Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Safe T Group and Paz 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 Paz Oil are associated (or correlated) with Safe T. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Safe T Group has no effect on the direction of Paz Oil i.e., Paz Oil and Safe T go up and down completely randomly.

Pair Corralation between Paz Oil and Safe T

Assuming the 90 days trading horizon Paz Oil is expected to generate 1.6 times less return on investment than Safe T. But when comparing it to its historical volatility, Paz Oil is 3.29 times less risky than Safe T. It trades about 0.35 of its potential returns per unit of risk. Safe T Group is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  26,650  in Safe T Group on April 22, 2025 and sell it today you would earn a total of  14,360  from holding Safe T Group or generate 53.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Paz Oil  vs.  Safe T Group

Paz Oil

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Paz Oil are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. Despite somewhat uncertain basic indicators, Paz Oil sustained solid returns over the last few months and may actually be approaching a breakup point.

Safe T Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Safe T Group are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Safe T sustained solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Paz Oil and Safe T

The main advantage of trading using opposite Paz Oil and Safe T positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Paz Oil position performs unexpectedly, Safe T 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 Safe T will offset losses from the drop in Safe T's long position.

The idea behind Paz Oil and Safe T Group 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.