Correlation Between Binh Minh and Petrovietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Binh Minh 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 Binh Minh and Petrovietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binh Minh Plastics and Petrovietnam Drilling Mud, you can compare the effects of market volatilities on Binh Minh 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 Binh Minh with a short position of Petrovietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Minh and Petrovietnam Drilling.
Diversification Opportunities for Binh Minh and Petrovietnam Drilling
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Binh and Petrovietnam is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Binh Minh Plastics 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 Binh Minh 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 Binh Minh Plastics 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 Binh Minh i.e., Binh Minh and Petrovietnam Drilling go up and down completely randomly.
Pair Corralation between Binh Minh and Petrovietnam Drilling
Assuming the 90 days trading horizon Binh Minh Plastics is expected to under-perform the Petrovietnam Drilling. In addition to that, Binh Minh is 1.3 times more volatile than Petrovietnam Drilling Mud. It trades about -0.13 of its total potential returns per unit of risk. Petrovietnam Drilling Mud is currently generating about -0.1 per unit of volatility. If you would invest 1,060,000 in Petrovietnam Drilling Mud on October 30, 2024 and sell it today you would lose (30,000) from holding Petrovietnam Drilling Mud or give up 2.83% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binh Minh Plastics vs. Petrovietnam Drilling Mud
Performance |
| Timeline |
| Binh Minh Plastics |
| Petrovietnam Drilling Mud |
Binh Minh and Petrovietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binh Minh and Petrovietnam Drilling
The main advantage of trading using opposite Binh Minh and Petrovietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binh Minh 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.| Binh Minh vs. DIC Holdings Construction | Binh Minh vs. Transport and Industry | Binh Minh vs. Da Nang Construction | Binh Minh vs. Transimex Transportation JSC |
| Petrovietnam Drilling vs. BaoMinh Insurance Corp | Petrovietnam Drilling vs. Industrial Urban Development | Petrovietnam Drilling vs. BIDV Insurance Corp | Petrovietnam Drilling vs. Ha Noi Education |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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