Correlation Between Bao Ngoc and Petrovietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Bao Ngoc 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 Bao Ngoc and Petrovietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bao Ngoc Investment and Petrovietnam Drilling Mud, you can compare the effects of market volatilities on Bao Ngoc 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 Bao Ngoc with a short position of Petrovietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bao Ngoc and Petrovietnam Drilling.
Diversification Opportunities for Bao Ngoc and Petrovietnam Drilling
-0.11 | Correlation Coefficient |
Good diversification
The 3 months correlation between Bao and Petrovietnam is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Bao Ngoc Investment 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 Bao Ngoc 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 Bao Ngoc Investment 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 Bao Ngoc i.e., Bao Ngoc and Petrovietnam Drilling go up and down completely randomly.
Pair Corralation between Bao Ngoc and Petrovietnam Drilling
Assuming the 90 days trading horizon Bao Ngoc Investment is expected to generate 0.88 times more return on investment than Petrovietnam Drilling. However, Bao Ngoc Investment is 1.13 times less risky than Petrovietnam Drilling. It trades about -0.08 of its potential returns per unit of risk. Petrovietnam Drilling Mud is currently generating about -0.16 per unit of risk. If you would invest 990,000 in Bao Ngoc Investment on September 14, 2024 and sell it today you would lose (30,000) from holding Bao Ngoc Investment or give up 3.03% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bao Ngoc Investment vs. Petrovietnam Drilling Mud
Performance |
| Timeline |
| Bao Ngoc Investment |
| Petrovietnam Drilling Mud |
Bao Ngoc and Petrovietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bao Ngoc and Petrovietnam Drilling
The main advantage of trading using opposite Bao Ngoc and Petrovietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bao Ngoc 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.| Bao Ngoc vs. Vietnam Petroleum Transport | Bao Ngoc vs. Hochiminh City Metal | Bao Ngoc vs. Petrolimex Insurance Corp | Bao Ngoc vs. VietinBank Securities JSC |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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