Correlation Between Materials Petroleum and Ben Thanh
Can any of the company-specific risk be diversified away by investing in both Materials Petroleum and Ben Thanh 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 Materials Petroleum and Ben Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Materials Petroleum JSC and Ben Thanh Rubber, you can compare the effects of market volatilities on Materials Petroleum and Ben Thanh 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 Materials Petroleum with a short position of Ben Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Petroleum and Ben Thanh.
Diversification Opportunities for Materials Petroleum and Ben Thanh
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Materials and Ben is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Materials Petroleum JSC and Ben Thanh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ben Thanh Rubber and Materials Petroleum 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 Materials Petroleum JSC are associated (or correlated) with Ben Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ben Thanh Rubber has no effect on the direction of Materials Petroleum i.e., Materials Petroleum and Ben Thanh go up and down completely randomly.
Pair Corralation between Materials Petroleum and Ben Thanh
Assuming the 90 days trading horizon Materials Petroleum is expected to generate 2.12 times less return on investment than Ben Thanh. In addition to that, Materials Petroleum is 2.4 times more volatile than Ben Thanh Rubber. It trades about 0.01 of its total potential returns per unit of risk. Ben Thanh Rubber is currently generating about 0.06 per unit of volatility. If you would invest 1,015,381 in Ben Thanh Rubber on October 12, 2024 and sell it today you would earn a total of 424,619 from holding Ben Thanh Rubber or generate 41.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 60.69% |
| Values | Daily Returns |
Materials Petroleum JSC vs. Ben Thanh Rubber
Performance |
| Timeline |
| Materials Petroleum JSC |
| Ben Thanh Rubber |
Materials Petroleum and Ben Thanh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materials Petroleum and Ben Thanh
The main advantage of trading using opposite Materials Petroleum and Ben Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Petroleum position performs unexpectedly, Ben Thanh 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 Ben Thanh will offset losses from the drop in Ben Thanh's long position.| Materials Petroleum vs. FIT INVEST JSC | Materials Petroleum vs. Damsan JSC | Materials Petroleum vs. An Phat Plastic | Materials Petroleum vs. APG Securities Joint |
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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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