Correlation Between Petrovietnam Drilling and Fecon Mining
Can any of the company-specific risk be diversified away by investing in both Petrovietnam Drilling and Fecon Mining 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 Petrovietnam Drilling and Fecon Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrovietnam Drilling Mud and Fecon Mining JSC, you can compare the effects of market volatilities on Petrovietnam Drilling and Fecon Mining 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 Petrovietnam Drilling with a short position of Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrovietnam Drilling and Fecon Mining.
Diversification Opportunities for Petrovietnam Drilling and Fecon Mining
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Petrovietnam and Fecon is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Drilling Mud and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC and Petrovietnam Drilling 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 Petrovietnam Drilling Mud are associated (or correlated) with Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of Petrovietnam Drilling i.e., Petrovietnam Drilling and Fecon Mining go up and down completely randomly.
Pair Corralation between Petrovietnam Drilling and Fecon Mining
Assuming the 90 days trading horizon Petrovietnam Drilling Mud is expected to generate 0.58 times more return on investment than Fecon Mining. However, Petrovietnam Drilling Mud is 1.72 times less risky than Fecon Mining. It trades about 0.01 of its potential returns per unit of risk. Fecon Mining JSC is currently generating about -0.17 per unit of risk. If you would invest 1,030,000 in Petrovietnam Drilling Mud on November 7, 2024 and sell it today you would earn a total of 0.00 from holding Petrovietnam Drilling Mud or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrovietnam Drilling Mud vs. Fecon Mining JSC
Performance |
| Timeline |
| Petrovietnam Drilling Mud |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Fecon Mining JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Petrovietnam Drilling and Fecon Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrovietnam Drilling and Fecon Mining
The main advantage of trading using opposite Petrovietnam Drilling and Fecon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrovietnam Drilling position performs unexpectedly, Fecon Mining 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 Fecon Mining will offset losses from the drop in Fecon Mining's long position.The idea behind Petrovietnam Drilling Mud and Fecon Mining JSC 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.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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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