Correlation Between PetroVietnam Drilling and Bao Ngoc
Can any of the company-specific risk be diversified away by investing in both PetroVietnam Drilling and Bao Ngoc 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 Bao Ngoc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroVietnam Drilling Well and Bao Ngoc Investment, you can compare the effects of market volatilities on PetroVietnam Drilling and Bao Ngoc 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 Bao Ngoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Drilling and Bao Ngoc.
Diversification Opportunities for PetroVietnam Drilling and Bao Ngoc
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between PetroVietnam and Bao is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Drilling Well and Bao Ngoc Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bao Ngoc Investment 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 Well are associated (or correlated) with Bao Ngoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bao Ngoc Investment has no effect on the direction of PetroVietnam Drilling i.e., PetroVietnam Drilling and Bao Ngoc go up and down completely randomly.
Pair Corralation between PetroVietnam Drilling and Bao Ngoc
Assuming the 90 days trading horizon PetroVietnam Drilling Well is expected to under-perform the Bao Ngoc. But the stock apears to be less risky and, when comparing its historical volatility, PetroVietnam Drilling Well is 1.83 times less risky than Bao Ngoc. The stock trades about -0.26 of its potential returns per unit of risk. The Bao Ngoc Investment is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 944,000 in Bao Ngoc Investment on September 2, 2024 and sell it today you would earn a total of 16,000 from holding Bao Ngoc Investment or generate 1.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroVietnam Drilling Well vs. Bao Ngoc Investment
Performance |
| Timeline |
| PetroVietnam Drilling |
| Bao Ngoc Investment |
PetroVietnam Drilling and Bao Ngoc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroVietnam Drilling and Bao Ngoc
The main advantage of trading using opposite PetroVietnam Drilling and Bao Ngoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroVietnam Drilling position performs unexpectedly, Bao Ngoc 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 Bao Ngoc will offset losses from the drop in Bao Ngoc's long position.| PetroVietnam Drilling vs. LDG Investment JSC | PetroVietnam Drilling vs. Thanh Dat Investment | PetroVietnam Drilling vs. 1369 Construction JSC | PetroVietnam Drilling vs. Vu Dang Investment |
| Bao Ngoc vs. Innovative Technology Development | Bao Ngoc vs. Saigon Viendong Technology | Bao Ngoc vs. Petrovietnam Drilling Mud | Bao Ngoc vs. Construction And 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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