Correlation Between Dow Jones and Petrovietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Dow Jones 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 Dow Jones and Petrovietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dow Jones Industrial and Petrovietnam Drilling Mud, you can compare the effects of market volatilities on Dow Jones 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 Dow Jones with a short position of Petrovietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dow Jones and Petrovietnam Drilling.
Diversification Opportunities for Dow Jones and Petrovietnam Drilling
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Dow and Petrovietnam is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Dow Jones Industrial 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 Dow Jones 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 Dow Jones Industrial 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 Dow Jones i.e., Dow Jones and Petrovietnam Drilling go up and down completely randomly.
Pair Corralation between Dow Jones and Petrovietnam Drilling
Assuming the 90 days trading horizon Dow Jones Industrial is expected to generate 0.61 times more return on investment than Petrovietnam Drilling. However, Dow Jones Industrial is 1.65 times less risky than Petrovietnam Drilling. It trades about 0.29 of its potential returns per unit of risk. Petrovietnam Drilling Mud is currently generating about -0.47 per unit of risk. If you would invest 4,214,154 in Dow Jones Industrial on August 31, 2024 and sell it today you would earn a total of 258,052 from holding Dow Jones Industrial or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dow Jones Industrial vs. Petrovietnam Drilling Mud
Performance |
| Timeline |
Dow Jones and Petrovietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Dow Jones Industrial
Pair trading matchups for Dow Jones
Petrovietnam Drilling Mud
Pair trading matchups for Petrovietnam Drilling
Pair Trading with Dow Jones and Petrovietnam Drilling
The main advantage of trading using opposite Dow Jones and Petrovietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dow Jones 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.| Dow Jones vs. Aerofoam Metals | Dow Jones vs. ACG Metals Limited | Dow Jones vs. China Clean Energy | Dow Jones vs. Fast Retailing Co |
| Petrovietnam Drilling vs. Thanh Dat Investment | Petrovietnam Drilling vs. Everland Investment JSC | Petrovietnam Drilling vs. Song Hong Aluminum | Petrovietnam Drilling vs. Century Synthetic Fiber |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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