Correlation Between Damsan JSC and Petrovietnam Technical
Can any of the company-specific risk be diversified away by investing in both Damsan JSC and Petrovietnam Technical 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 Technical 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 Technical Services, you can compare the effects of market volatilities on Damsan JSC and Petrovietnam Technical 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 Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damsan JSC and Petrovietnam Technical.
Diversification Opportunities for Damsan JSC and Petrovietnam Technical
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 Technical Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrovietnam Technical 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 Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrovietnam Technical has no effect on the direction of Damsan JSC i.e., Damsan JSC and Petrovietnam Technical go up and down completely randomly.
Pair Corralation between Damsan JSC and Petrovietnam Technical
Assuming the 90 days trading horizon Damsan JSC is expected to generate 0.66 times more return on investment than Petrovietnam Technical. However, Damsan JSC is 1.51 times less risky than Petrovietnam Technical. It trades about -0.31 of its potential returns per unit of risk. Petrovietnam Technical Services is currently generating about -0.37 per unit of risk. If you would invest 929,000 in Damsan JSC on August 28, 2024 and sell it today you would lose (51,000) from holding Damsan JSC or give up 5.49% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Damsan JSC vs. Petrovietnam Technical Service
Performance |
| Timeline |
| Damsan JSC |
| Petrovietnam Technical |
Damsan JSC and Petrovietnam Technical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Damsan JSC and Petrovietnam Technical
The main advantage of trading using opposite Damsan JSC and Petrovietnam Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Damsan JSC position performs unexpectedly, Petrovietnam Technical 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 Technical will offset losses from the drop in Petrovietnam Technical's long position.| Damsan JSC vs. FIT INVEST JSC | Damsan JSC vs. An Phat Plastic | Damsan JSC vs. APG Securities Joint | Damsan JSC vs. Binhthuan Agriculture Services |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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