Correlation Between Binhthuan Agriculture and PetroVietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and PetroVietnam Drilling 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 Binhthuan Agriculture and PetroVietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binhthuan Agriculture Services and PetroVietnam Drilling Well, you can compare the effects of market volatilities on Binhthuan Agriculture and PetroVietnam Drilling 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 Binhthuan Agriculture with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and PetroVietnam Drilling.
Diversification Opportunities for Binhthuan Agriculture and PetroVietnam Drilling
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Binhthuan and PetroVietnam is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and PetroVietnam Drilling Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Drilling and Binhthuan Agriculture 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 Binhthuan Agriculture Services are associated (or correlated) with PetroVietnam Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroVietnam Drilling has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and PetroVietnam Drilling go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and PetroVietnam Drilling
Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to under-perform the PetroVietnam Drilling. In addition to that, Binhthuan Agriculture is 1.05 times more volatile than PetroVietnam Drilling Well. It trades about -0.03 of its total potential returns per unit of risk. PetroVietnam Drilling Well is currently generating about 0.05 per unit of volatility. If you would invest 1,650,000 in PetroVietnam Drilling Well on September 2, 2024 and sell it today you would earn a total of 720,000 from holding PetroVietnam Drilling Well or generate 43.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. PetroVietnam Drilling Well
Performance |
| Timeline |
| Binhthuan Agriculture |
| PetroVietnam Drilling |
Binhthuan Agriculture and PetroVietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and PetroVietnam Drilling
The main advantage of trading using opposite Binhthuan Agriculture and PetroVietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, PetroVietnam Drilling 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 PetroVietnam Drilling will offset losses from the drop in PetroVietnam Drilling's long position.| Binhthuan Agriculture vs. Ba Ria Thermal | Binhthuan Agriculture vs. Vietnam Dairy Products | Binhthuan Agriculture vs. Hochiminh City Metal | Binhthuan Agriculture vs. Investment and Industrial |
| PetroVietnam Drilling vs. LDG Investment JSC | PetroVietnam Drilling vs. Thanh Dat Investment | PetroVietnam Drilling vs. 1369 Construction JSC | PetroVietnam Drilling vs. Vu Dang Investment |
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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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