Correlation Between Pha Le and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Pha Le and Petrolimex Petrochemical 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 Pha Le and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pha Le Plastics and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Pha Le and Petrolimex Petrochemical 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 Pha Le with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Petrolimex Petrochemical.
Diversification Opportunities for Pha Le and Petrolimex Petrochemical
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Pha and Petrolimex is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Pha Le 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 Pha Le Plastics are associated (or correlated) with Petrolimex Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Petrochemical has no effect on the direction of Pha Le i.e., Pha Le and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Pha Le and Petrolimex Petrochemical
Assuming the 90 days trading horizon Pha Le Plastics is expected to generate 0.77 times more return on investment than Petrolimex Petrochemical. However, Pha Le Plastics is 1.29 times less risky than Petrolimex Petrochemical. It trades about -0.11 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about -0.16 per unit of risk. If you would invest 470,000 in Pha Le Plastics on August 28, 2024 and sell it today you would lose (19,000) from holding Pha Le Plastics or give up 4.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Pha Le Plastics vs. Petrolimex Petrochemical JSC
Performance |
| Timeline |
| Pha Le Plastics |
| Petrolimex Petrochemical |
Pha Le and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Le and Petrolimex Petrochemical
The main advantage of trading using opposite Pha Le and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Le position performs unexpectedly, Petrolimex Petrochemical 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 Petrolimex Petrochemical will offset losses from the drop in Petrolimex Petrochemical's long position.| Pha Le vs. FIT INVEST JSC | Pha Le vs. Damsan JSC | Pha Le vs. An Phat Plastic | Pha Le vs. APG Securities Joint |
| Petrolimex Petrochemical vs. FIT INVEST JSC | Petrolimex Petrochemical vs. Damsan JSC | Petrolimex Petrochemical vs. An Phat Plastic | Petrolimex Petrochemical vs. APG Securities Joint |
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.
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