Correlation Between Fecon Mining and PetroVietnam Transportation
Can any of the company-specific risk be diversified away by investing in both Fecon Mining and PetroVietnam Transportation 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 Transportation 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 Transportation Corp, you can compare the effects of market volatilities on Fecon Mining and PetroVietnam Transportation 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 Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fecon Mining and PetroVietnam Transportation.
Diversification Opportunities for Fecon Mining and PetroVietnam Transportation
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Fecon and PetroVietnam is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Fecon Mining JSC and PetroVietnam Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Transportation 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 Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroVietnam Transportation has no effect on the direction of Fecon Mining i.e., Fecon Mining and PetroVietnam Transportation go up and down completely randomly.
Pair Corralation between Fecon Mining and PetroVietnam Transportation
Assuming the 90 days trading horizon Fecon Mining JSC is expected to under-perform the PetroVietnam Transportation. But the stock apears to be less risky and, when comparing its historical volatility, Fecon Mining JSC is 1.24 times less risky than PetroVietnam Transportation. The stock trades about -0.13 of its potential returns per unit of risk. The PetroVietnam Transportation Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,581,935 in PetroVietnam Transportation Corp on September 3, 2024 and sell it today you would earn a total of 118,065 from holding PetroVietnam Transportation Corp or generate 4.57% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fecon Mining JSC vs. PetroVietnam Transportation Co
Performance |
| Timeline |
| Fecon Mining JSC |
| PetroVietnam Transportation |
Fecon Mining and PetroVietnam Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fecon Mining and PetroVietnam Transportation
The main advantage of trading using opposite Fecon Mining and PetroVietnam Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fecon Mining position performs unexpectedly, PetroVietnam Transportation 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 Transportation will offset losses from the drop in PetroVietnam Transportation's long position.| Fecon Mining vs. FIT INVEST JSC | Fecon Mining vs. Damsan JSC | Fecon Mining vs. An Phat Plastic | Fecon Mining vs. Alphanam ME |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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