Correlation Between Fecon Mining and Petrovietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Fecon Mining 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 Fecon Mining and Petrovietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fecon Mining JSC and Petrovietnam Drilling Mud, you can compare the effects of market volatilities on Fecon Mining 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 Fecon Mining with a short position of Petrovietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fecon Mining and Petrovietnam Drilling.
Diversification Opportunities for Fecon Mining and Petrovietnam Drilling
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Fecon and Petrovietnam is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Fecon Mining JSC 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 Fecon Mining 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 Fecon Mining JSC 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 Fecon Mining i.e., Fecon Mining and Petrovietnam Drilling go up and down completely randomly.
Pair Corralation between Fecon Mining and Petrovietnam Drilling
Assuming the 90 days trading horizon Fecon Mining JSC is expected to generate 0.85 times more return on investment than Petrovietnam Drilling. However, Fecon Mining JSC is 1.18 times less risky than Petrovietnam Drilling. It trades about -0.1 of its potential returns per unit of risk. Petrovietnam Drilling Mud is currently generating about -0.27 per unit of risk. If you would invest 330,000 in Fecon Mining JSC on August 31, 2024 and sell it today you would lose (22,000) from holding Fecon Mining JSC or give up 6.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fecon Mining JSC vs. Petrovietnam Drilling Mud
Performance |
| Timeline |
| Fecon Mining JSC |
| Petrovietnam Drilling Mud |
Fecon Mining and Petrovietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fecon Mining and Petrovietnam Drilling
The main advantage of trading using opposite Fecon Mining and Petrovietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fecon Mining 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.| Fecon Mining vs. PVI Reinsurance Corp | Fecon Mining vs. PetroVietnam Drilling Well | Fecon Mining vs. Petrolimex Petrochemical JSC | Fecon Mining vs. Hochiminh City Metal |
| 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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