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 Well, 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
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hochiminh and PetroVietnam is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and PetroVietnam Drilling Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Drilling 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 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 is expected to generate 1.82 times less return on investment than PetroVietnam Drilling. But when comparing it to its historical volatility, Hochiminh City Metal is 1.43 times less risky than PetroVietnam Drilling. It trades about 0.04 of its potential returns per unit of risk. PetroVietnam Drilling Well is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,650,000 in PetroVietnam Drilling Well on September 2, 2024 and sell it today you would earn a total of 720,000 from holding PetroVietnam Drilling Well or generate 43.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochiminh City Metal vs. PetroVietnam Drilling Well
Performance |
| Timeline |
| Hochiminh City Metal |
| PetroVietnam Drilling |
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. FIT INVEST JSC | Hochiminh City vs. Damsan JSC | Hochiminh City vs. An Phat Plastic | Hochiminh City vs. Alphanam ME |
| 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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