Correlation Between Materials Petroleum and Vietnam Petroleum
Can any of the company-specific risk be diversified away by investing in both Materials Petroleum and Vietnam 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 Materials Petroleum and Vietnam Petroleum 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 Vietnam Petroleum Transport, you can compare the effects of market volatilities on Materials Petroleum and Vietnam 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 Materials Petroleum with a short position of Vietnam Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Petroleum and Vietnam Petroleum.
Diversification Opportunities for Materials Petroleum and Vietnam Petroleum
0.14 | Correlation Coefficient |
Average diversification
The 3 months correlation between Materials and Vietnam is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Materials Petroleum JSC and Vietnam Petroleum Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Petroleum 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 Vietnam Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Petroleum has no effect on the direction of Materials Petroleum i.e., Materials Petroleum and Vietnam Petroleum go up and down completely randomly.
Pair Corralation between Materials Petroleum and Vietnam Petroleum
Assuming the 90 days trading horizon Materials Petroleum JSC is expected to generate 1.29 times more return on investment than Vietnam Petroleum. However, Materials Petroleum is 1.29 times more volatile than Vietnam Petroleum Transport. It trades about -0.03 of its potential returns per unit of risk. Vietnam Petroleum Transport is currently generating about -0.1 per unit of risk. If you would invest 2,820,000 in Materials Petroleum JSC on October 9, 2024 and sell it today you would lose (35,000) from holding Materials Petroleum JSC or give up 1.24% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 55.0% |
| Values | Daily Returns |
Materials Petroleum JSC vs. Vietnam Petroleum Transport
Performance |
| Timeline |
| Materials Petroleum JSC |
| Vietnam Petroleum |
Materials Petroleum and Vietnam Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Materials Petroleum and Vietnam Petroleum
The main advantage of trading using opposite Materials Petroleum and Vietnam Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Petroleum position performs unexpectedly, Vietnam 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 Vietnam Petroleum will offset losses from the drop in Vietnam Petroleum's long position.| Materials Petroleum vs. Military Insurance Corp | Materials Petroleum vs. Bao Ngoc Investment | Materials Petroleum vs. HUD1 Investment and | Materials Petroleum vs. Hochiminh City Metal |
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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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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