Correlation Between Damsan JSC and PetroVietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Damsan JSC 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 Damsan JSC and PetroVietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Damsan JSC and PetroVietnam Drilling Well, you can compare the effects of market volatilities on Damsan JSC 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 Damsan JSC with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damsan JSC and PetroVietnam Drilling.
Diversification Opportunities for Damsan JSC and PetroVietnam Drilling
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Damsan and PetroVietnam is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and PetroVietnam Drilling Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Drilling and Damsan JSC 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 Damsan JSC 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 Damsan JSC i.e., Damsan JSC and PetroVietnam Drilling go up and down completely randomly.
Pair Corralation between Damsan JSC and PetroVietnam Drilling
Assuming the 90 days trading horizon Damsan JSC is expected to generate 1.83 times less return on investment than PetroVietnam Drilling. In addition to that, Damsan JSC is 1.18 times more volatile than PetroVietnam Drilling Well. It trades about 0.02 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Damsan JSC vs. PetroVietnam Drilling Well
Performance |
| Timeline |
| Damsan JSC |
| PetroVietnam Drilling |
Damsan JSC and PetroVietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Damsan JSC and PetroVietnam Drilling
The main advantage of trading using opposite Damsan JSC and PetroVietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Damsan JSC 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.| Damsan JSC vs. FIT INVEST JSC | Damsan JSC vs. An Phat Plastic | Damsan JSC vs. Alphanam ME | Damsan JSC vs. APG Securities Joint |
| 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 Global Correlations module to find global opportunities by holding instruments from different markets.
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