Correlation Between Ford and PetroVietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and PetroVietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and PetroVietnam Drilling Well, you can compare the effects of market volatilities on Ford 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 Ford with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and PetroVietnam Drilling.
Diversification Opportunities for Ford and PetroVietnam Drilling
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ford and PetroVietnam is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and PetroVietnam Drilling Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Drilling and Ford 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 Ford Motor 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 has no effect on the direction of Ford i.e., Ford and PetroVietnam Drilling go up and down completely randomly.
Pair Corralation between Ford and PetroVietnam Drilling
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.38 times more return on investment than PetroVietnam Drilling. However, Ford is 1.38 times more volatile than PetroVietnam Drilling Well. It trades about 0.25 of its potential returns per unit of risk. PetroVietnam Drilling Well is currently generating about -0.26 per unit of risk. If you would invest 1,008 in Ford Motor on September 2, 2024 and sell it today you would earn a total of 105.00 from holding Ford Motor or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Ford Motor vs. PetroVietnam Drilling Well
Performance |
| Timeline |
| Ford Motor |
| PetroVietnam Drilling |
Ford and PetroVietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and PetroVietnam Drilling
The main advantage of trading using opposite Ford and PetroVietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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.The idea behind Ford Motor and PetroVietnam Drilling Well pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| PetroVietnam Drilling vs. LDG Investment JSC | PetroVietnam Drilling vs. Thanh Dat Investment | PetroVietnam Drilling vs. 1369 Construction JSC | PetroVietnam Drilling vs. Vu Dang Investment |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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