Correlation Between Petrolimex Insurance and Phuoc Hoa
Can any of the company-specific risk be diversified away by investing in both Petrolimex Insurance and Phuoc Hoa 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 Petrolimex Insurance and Phuoc Hoa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrolimex Insurance Corp and Phuoc Hoa Rubber, you can compare the effects of market volatilities on Petrolimex Insurance and Phuoc Hoa 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 Petrolimex Insurance with a short position of Phuoc Hoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Insurance and Phuoc Hoa.
Diversification Opportunities for Petrolimex Insurance and Phuoc Hoa
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petrolimex and Phuoc is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Insurance Corp and Phuoc Hoa Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phuoc Hoa Rubber and Petrolimex 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 Petrolimex Insurance Corp are associated (or correlated) with Phuoc Hoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phuoc Hoa Rubber has no effect on the direction of Petrolimex Insurance i.e., Petrolimex Insurance and Phuoc Hoa go up and down completely randomly.
Pair Corralation between Petrolimex Insurance and Phuoc Hoa
Assuming the 90 days trading horizon Petrolimex Insurance Corp is expected to under-perform the Phuoc Hoa. In addition to that, Petrolimex Insurance is 2.61 times more volatile than Phuoc Hoa Rubber. It trades about -0.01 of its total potential returns per unit of risk. Phuoc Hoa Rubber is currently generating about 0.15 per unit of volatility. If you would invest 5,680,000 in Phuoc Hoa Rubber on September 14, 2024 and sell it today you would earn a total of 200,000 from holding Phuoc Hoa Rubber or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 59.09% |
| Values | Daily Returns |
Petrolimex Insurance Corp vs. Phuoc Hoa Rubber
Performance |
| Timeline |
| Petrolimex Insurance Corp |
| Phuoc Hoa Rubber |
Petrolimex Insurance and Phuoc Hoa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrolimex Insurance and Phuoc Hoa
The main advantage of trading using opposite Petrolimex Insurance and Phuoc Hoa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex Insurance position performs unexpectedly, Phuoc Hoa 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 Phuoc Hoa will offset losses from the drop in Phuoc Hoa's long position.The idea behind Petrolimex Insurance Corp and Phuoc Hoa Rubber pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
| Phuoc Hoa vs. Vietnam National Reinsurance | Phuoc Hoa vs. Long An Food | Phuoc Hoa vs. Petrolimex Insurance Corp | Phuoc Hoa vs. An Phat Plastic |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account |