Correlation Between BaoMinh Insurance and Pacific Petroleum
Can any of the company-specific risk be diversified away by investing in both BaoMinh Insurance 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 BaoMinh Insurance and Pacific Petroleum 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 Pacific Petroleum Transportation, you can compare the effects of market volatilities on BaoMinh Insurance 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 BaoMinh Insurance with a short position of Pacific Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of BaoMinh Insurance and Pacific Petroleum.
Diversification Opportunities for BaoMinh Insurance and Pacific Petroleum
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between BaoMinh and Pacific is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding BaoMinh Insurance Corp and Pacific Petroleum Transportati in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pacific Petroleum 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 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 BaoMinh Insurance i.e., BaoMinh Insurance and Pacific Petroleum go up and down completely randomly.
Pair Corralation between BaoMinh Insurance and Pacific Petroleum
Assuming the 90 days trading horizon BaoMinh Insurance Corp is expected to generate 0.69 times more return on investment than Pacific Petroleum. However, BaoMinh Insurance Corp is 1.45 times less risky than Pacific Petroleum. It trades about -0.12 of its potential returns per unit of risk. Pacific Petroleum Transportation is currently generating about -0.26 per unit of risk. If you would invest 2,125,000 in BaoMinh Insurance Corp on October 29, 2024 and sell it today you would lose (70,000) from holding BaoMinh Insurance Corp or give up 3.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
BaoMinh Insurance Corp vs. Pacific Petroleum Transportati
Performance |
| Timeline |
| BaoMinh Insurance Corp |
| Pacific Petroleum |
BaoMinh Insurance and Pacific Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with BaoMinh Insurance and Pacific Petroleum
The main advantage of trading using opposite BaoMinh Insurance and Pacific Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BaoMinh Insurance 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.| BaoMinh Insurance vs. PV2 Investment JSC | BaoMinh Insurance vs. Hai An Transport | BaoMinh Insurance vs. Transport and Industry | BaoMinh Insurance vs. AgriBank Securities JSC |
| Pacific Petroleum vs. Ba Ria Thermal | Pacific Petroleum vs. CEO Group JSC | Pacific Petroleum vs. Pha Le Plastics | Pacific Petroleum vs. Tay Ninh Rubber |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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