Correlation Between Hochiminh City and Petrovietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Hochiminh City 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 Hochiminh City and Petrovietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hochiminh City Metal and Petrovietnam Drilling Mud, you can compare the effects of market volatilities on Hochiminh City 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 Hochiminh City with a short position of Petrovietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Petrovietnam Drilling.
Diversification Opportunities for Hochiminh City and Petrovietnam Drilling
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hochiminh and Petrovietnam is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal 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 Hochiminh City 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 Hochiminh City Metal 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 Hochiminh City i.e., Hochiminh City and Petrovietnam Drilling go up and down completely randomly.
Pair Corralation between Hochiminh City and Petrovietnam Drilling
Assuming the 90 days trading horizon Hochiminh City Metal is expected to generate 0.51 times more return on investment than Petrovietnam Drilling. However, Hochiminh City Metal is 1.97 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 -0.51 per unit of risk. If you would invest 1,100,000 in Hochiminh City Metal on August 27, 2024 and sell it today you would lose (20,000) from holding Hochiminh City Metal or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Hochiminh City Metal vs. Petrovietnam Drilling Mud
Performance |
| Timeline |
| Hochiminh City Metal |
| Petrovietnam Drilling Mud |
Hochiminh City and Petrovietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Petrovietnam Drilling
The main advantage of trading using opposite Hochiminh City and Petrovietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City 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.| Hochiminh City vs. Tri Viet Management | Hochiminh City vs. Tay Ninh Rubber | Hochiminh City vs. Hanoi Plastics JSC | Hochiminh City vs. Post and Telecommunications |
| Petrovietnam Drilling vs. Cotec Construction JSC | Petrovietnam Drilling vs. Development Investment Construction | Petrovietnam Drilling vs. Ba Ria Thermal | Petrovietnam Drilling vs. Fecon Mining JSC |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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