Correlation Between Alphanam and Petrovietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Alphanam 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 Alphanam and Petrovietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alphanam ME and Petrovietnam Drilling Mud, you can compare the effects of market volatilities on Alphanam 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 Alphanam with a short position of Petrovietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and Petrovietnam Drilling.
Diversification Opportunities for Alphanam and Petrovietnam Drilling
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Alphanam and Petrovietnam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Petrovietnam Drilling Mud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrovietnam Drilling Mud and Alphanam 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 Alphanam ME 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 Mud has no effect on the direction of Alphanam i.e., Alphanam and Petrovietnam Drilling go up and down completely randomly.
Pair Corralation between Alphanam and Petrovietnam Drilling
Assuming the 90 days trading horizon Alphanam ME is expected to generate 2.65 times more return on investment than Petrovietnam Drilling. However, Alphanam is 2.65 times more volatile than Petrovietnam Drilling Mud. It trades about -0.07 of its potential returns per unit of risk. Petrovietnam Drilling Mud is currently generating about -0.44 per unit of risk. If you would invest 500,000 in Alphanam ME on September 1, 2024 and sell it today you would lose (20,000) from holding Alphanam ME or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Alphanam ME vs. Petrovietnam Drilling Mud
Performance |
| Timeline |
| Alphanam ME |
| Petrovietnam Drilling Mud |
Alphanam and Petrovietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alphanam and Petrovietnam Drilling
The main advantage of trading using opposite Alphanam and Petrovietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphanam 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.| Alphanam vs. Hanoi Plastics JSC | Alphanam vs. Everland Investment JSC | Alphanam vs. Thanh Dat Investment | Alphanam vs. Vietnam Rubber Group |
| Petrovietnam Drilling vs. FIT INVEST JSC | Petrovietnam Drilling vs. Damsan JSC | Petrovietnam Drilling vs. An Phat Plastic | Petrovietnam Drilling vs. Alphanam ME |
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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