Correlation Between Petrolimex Petrochemical and PetroVietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Petrolimex Petrochemical 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 Petrolimex Petrochemical and PetroVietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrolimex Petrochemical JSC and PetroVietnam Drilling Well, you can compare the effects of market volatilities on Petrolimex Petrochemical 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 Petrolimex Petrochemical with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Petrochemical and PetroVietnam Drilling.
Diversification Opportunities for Petrolimex Petrochemical and PetroVietnam Drilling
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Petrolimex and PetroVietnam is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Petrochemical 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 Petrolimex Petrochemical 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 Petrochemical 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 Petrolimex Petrochemical i.e., Petrolimex Petrochemical and PetroVietnam Drilling go up and down completely randomly.
Pair Corralation between Petrolimex Petrochemical and PetroVietnam Drilling
Assuming the 90 days trading horizon Petrolimex Petrochemical JSC is expected to generate 1.45 times more return on investment than PetroVietnam Drilling. However, Petrolimex Petrochemical is 1.45 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 -0.26 per unit of risk. If you would invest 2,160,000 in Petrolimex Petrochemical JSC on September 2, 2024 and sell it today you would lose (100,000) from holding Petrolimex Petrochemical JSC or give up 4.63% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Petrolimex Petrochemical JSC vs. PetroVietnam Drilling Well
Performance |
| Timeline |
| Petrolimex Petrochemical |
| PetroVietnam Drilling |
Petrolimex Petrochemical and PetroVietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrolimex Petrochemical and PetroVietnam Drilling
The main advantage of trading using opposite Petrolimex Petrochemical and PetroVietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex Petrochemical 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.| Petrolimex Petrochemical vs. FIT INVEST JSC | Petrolimex Petrochemical vs. Damsan JSC | Petrolimex Petrochemical vs. An Phat Plastic | Petrolimex Petrochemical 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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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