Correlation Between MST Investment and PetroVietnam Drilling
Can any of the company-specific risk be diversified away by investing in both MST Investment 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 MST Investment and PetroVietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MST Investment JSC and PetroVietnam Drilling Well, you can compare the effects of market volatilities on MST Investment 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 MST Investment with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of MST Investment and PetroVietnam Drilling.
Diversification Opportunities for MST Investment and PetroVietnam Drilling
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between MST and PetroVietnam is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding MST Investment JSC and PetroVietnam Drilling Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Drilling and MST Investment 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 MST Investment 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 has no effect on the direction of MST Investment i.e., MST Investment and PetroVietnam Drilling go up and down completely randomly.
Pair Corralation between MST Investment and PetroVietnam Drilling
Assuming the 90 days trading horizon MST Investment JSC is expected to generate 1.96 times more return on investment than PetroVietnam Drilling. However, MST Investment is 1.96 times more volatile than PetroVietnam Drilling Well. It trades about 0.1 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 560,000 in MST Investment JSC on August 31, 2024 and sell it today you would earn a total of 30,000 from holding MST Investment JSC or generate 5.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
MST Investment JSC vs. PetroVietnam Drilling Well
Performance |
| Timeline |
| MST Investment JSC |
| PetroVietnam Drilling |
MST Investment and PetroVietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MST Investment and PetroVietnam Drilling
The main advantage of trading using opposite MST Investment and PetroVietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MST Investment 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.| MST Investment vs. Vu Dang Investment | MST Investment vs. 577 Investment Corp | MST Investment vs. Tienlen Steel Corp | MST Investment vs. Hanoi Beer Alcohol |
| 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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