Correlation Between Danang Rubber and Petrovietnam Technical
Can any of the company-specific risk be diversified away by investing in both Danang Rubber and Petrovietnam Technical 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 Danang Rubber and Petrovietnam Technical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danang Rubber JSC and Petrovietnam Technical Services, you can compare the effects of market volatilities on Danang Rubber and Petrovietnam Technical 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 Danang Rubber with a short position of Petrovietnam Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Rubber and Petrovietnam Technical.
Diversification Opportunities for Danang Rubber and Petrovietnam Technical
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Danang and Petrovietnam is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Danang Rubber JSC and Petrovietnam Technical Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrovietnam Technical and Danang Rubber 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 Danang Rubber JSC are associated (or correlated) with Petrovietnam Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrovietnam Technical has no effect on the direction of Danang Rubber i.e., Danang Rubber and Petrovietnam Technical go up and down completely randomly.
Pair Corralation between Danang Rubber and Petrovietnam Technical
Assuming the 90 days trading horizon Danang Rubber JSC is expected to under-perform the Petrovietnam Technical. But the stock apears to be less risky and, when comparing its historical volatility, Danang Rubber JSC is 1.43 times less risky than Petrovietnam Technical. The stock trades about -0.52 of its potential returns per unit of risk. The Petrovietnam Technical Services is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest 3,370,000 in Petrovietnam Technical Services on October 25, 2024 and sell it today you would lose (60,000) from holding Petrovietnam Technical Services or give up 1.78% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danang Rubber JSC vs. Petrovietnam Technical Service
Performance |
| Timeline |
| Danang Rubber JSC |
| Petrovietnam Technical |
Danang Rubber and Petrovietnam Technical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danang Rubber and Petrovietnam Technical
The main advantage of trading using opposite Danang Rubber and Petrovietnam Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danang Rubber position performs unexpectedly, Petrovietnam Technical 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 Technical will offset losses from the drop in Petrovietnam Technical's long position.| Danang Rubber vs. FIT INVEST JSC | Danang Rubber vs. Damsan JSC | Danang Rubber vs. An Phat Plastic | Danang Rubber vs. APG Securities Joint |
| Petrovietnam Technical vs. FIT INVEST JSC | Petrovietnam Technical vs. Damsan JSC | Petrovietnam Technical vs. An Phat Plastic | Petrovietnam Technical vs. APG Securities Joint |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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