Correlation Between Military Insurance and PetroVietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Military Insurance 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 Military Insurance and PetroVietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Military Insurance Corp and PetroVietnam Drilling Well, you can compare the effects of market volatilities on Military Insurance 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 Military Insurance with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Military Insurance and PetroVietnam Drilling.
Diversification Opportunities for Military Insurance and PetroVietnam Drilling
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Military and PetroVietnam is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Military Insurance Corp and PetroVietnam Drilling Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Drilling and Military Insurance 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 Military Insurance Corp 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 Military Insurance i.e., Military Insurance and PetroVietnam Drilling go up and down completely randomly.
Pair Corralation between Military Insurance and PetroVietnam Drilling
Assuming the 90 days trading horizon Military Insurance Corp is expected to generate 0.69 times more return on investment than PetroVietnam Drilling. However, Military Insurance Corp is 1.45 times less risky than PetroVietnam Drilling. It trades about -0.01 of its potential returns per unit of risk. PetroVietnam Drilling Well is currently generating about -0.25 per unit of risk. If you would invest 1,700,000 in Military Insurance Corp on August 31, 2024 and sell it today you would lose (5,000) from holding Military Insurance Corp or give up 0.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Military Insurance Corp vs. PetroVietnam Drilling Well
Performance |
| Timeline |
| Military Insurance Corp |
| PetroVietnam Drilling |
Military Insurance and PetroVietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Military Insurance and PetroVietnam Drilling
The main advantage of trading using opposite Military Insurance and PetroVietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Military Insurance 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.| Military Insurance vs. FIT INVEST JSC | Military Insurance vs. Damsan JSC | Military Insurance vs. An Phat Plastic | Military Insurance vs. Alphanam ME |
| PetroVietnam Drilling vs. Vietnam JSCmmercial Bank | PetroVietnam Drilling vs. Military Insurance Corp | PetroVietnam Drilling vs. Thanh Dat Investment | PetroVietnam Drilling vs. LDG Investment 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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