Correlation Between BaoMinh Insurance and Petrovietnam Drilling
Can any of the company-specific risk be diversified away by investing in both BaoMinh Insurance 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 BaoMinh Insurance and Petrovietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between BaoMinh Insurance Corp and Petrovietnam Drilling Mud, you can compare the effects of market volatilities on BaoMinh Insurance 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 BaoMinh Insurance with a short position of Petrovietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of BaoMinh Insurance and Petrovietnam Drilling.
Diversification Opportunities for BaoMinh Insurance and Petrovietnam Drilling
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between BaoMinh and Petrovietnam is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BaoMinh Insurance Corp 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 BaoMinh Insurance 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 BaoMinh Insurance Corp 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 BaoMinh Insurance i.e., BaoMinh Insurance and Petrovietnam Drilling go up and down completely randomly.
Pair Corralation between BaoMinh Insurance and Petrovietnam Drilling
Assuming the 90 days trading horizon BaoMinh Insurance Corp is expected to under-perform the Petrovietnam Drilling. But the stock apears to be less risky and, when comparing its historical volatility, BaoMinh Insurance Corp is 1.29 times less risky than Petrovietnam Drilling. The stock trades about -0.1 of its potential returns per unit of risk. The Petrovietnam Drilling Mud is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 1,040,000 in Petrovietnam Drilling Mud on October 17, 2024 and sell it today you would lose (30,000) from holding Petrovietnam Drilling Mud or give up 2.88% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
BaoMinh Insurance Corp vs. Petrovietnam Drilling Mud
Performance |
| Timeline |
| BaoMinh Insurance Corp |
| Petrovietnam Drilling Mud |
BaoMinh Insurance and Petrovietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BaoMinh Insurance and Petrovietnam Drilling
The main advantage of trading using opposite BaoMinh Insurance and Petrovietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BaoMinh Insurance 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.| BaoMinh Insurance vs. Cotec Construction JSC | BaoMinh Insurance vs. Binhthuan Agriculture Services | BaoMinh Insurance vs. An Phat Plastic | BaoMinh Insurance vs. Tien Phong Plastic |
| Petrovietnam Drilling vs. BaoMinh Insurance Corp | Petrovietnam Drilling vs. Binh Minh Plastics | Petrovietnam Drilling vs. Tri Viet Management | Petrovietnam Drilling vs. Tienlen Steel Corp |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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