Correlation Between Hanoi Beer and Pacific Petroleum
Can any of the company-specific risk be diversified away by investing in both Hanoi Beer and Pacific Petroleum 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 Hanoi Beer and Pacific Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanoi Beer Alcohol and Pacific Petroleum Transportation, you can compare the effects of market volatilities on Hanoi Beer and Pacific Petroleum 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 Hanoi Beer with a short position of Pacific Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanoi Beer and Pacific Petroleum.
Diversification Opportunities for Hanoi Beer and Pacific Petroleum
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanoi and Pacific is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Hanoi Beer Alcohol and Pacific Petroleum Transportati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Petroleum and Hanoi Beer 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 Hanoi Beer Alcohol are associated (or correlated) with Pacific Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pacific Petroleum has no effect on the direction of Hanoi Beer i.e., Hanoi Beer and Pacific Petroleum go up and down completely randomly.
Pair Corralation between Hanoi Beer and Pacific Petroleum
Assuming the 90 days trading horizon Hanoi Beer Alcohol is expected to under-perform the Pacific Petroleum. In addition to that, Hanoi Beer is 1.05 times more volatile than Pacific Petroleum Transportation. It trades about -0.18 of its total potential returns per unit of risk. Pacific Petroleum Transportation is currently generating about -0.09 per unit of volatility. If you would invest 1,730,000 in Pacific Petroleum Transportation on November 7, 2024 and sell it today you would lose (50,000) from holding Pacific Petroleum Transportation or give up 2.89% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 62.5% |
| Values | Daily Returns |
Hanoi Beer Alcohol vs. Pacific Petroleum Transportati
Performance |
| Timeline |
| Hanoi Beer Alcohol |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Pacific Petroleum |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Hanoi Beer and Pacific Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanoi Beer and Pacific Petroleum
The main advantage of trading using opposite Hanoi Beer and Pacific Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanoi Beer position performs unexpectedly, Pacific Petroleum 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 Pacific Petroleum will offset losses from the drop in Pacific Petroleum's long position.| Hanoi Beer vs. Damsan JSC | Hanoi Beer vs. Binhthuan Agriculture Services | Hanoi Beer vs. Bentre Aquaproduct Import |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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