Correlation Between PetroVietnam Drilling and PVI Reinsurance
Can any of the company-specific risk be diversified away by investing in both PetroVietnam Drilling and PVI Reinsurance 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 PVI Reinsurance 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 PVI Reinsurance Corp, you can compare the effects of market volatilities on PetroVietnam Drilling and PVI Reinsurance 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 PVI Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Drilling and PVI Reinsurance.
Diversification Opportunities for PetroVietnam Drilling and PVI Reinsurance
-0.18 | Correlation Coefficient |
Good diversification
The 3 months correlation between PetroVietnam and PVI is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Drilling Well and PVI Reinsurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PVI Reinsurance Corp 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 PVI Reinsurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PVI Reinsurance Corp has no effect on the direction of PetroVietnam Drilling i.e., PetroVietnam Drilling and PVI Reinsurance go up and down completely randomly.
Pair Corralation between PetroVietnam Drilling and PVI Reinsurance
Assuming the 90 days trading horizon PetroVietnam Drilling Well is expected to generate 0.71 times more return on investment than PVI Reinsurance. However, PetroVietnam Drilling Well is 1.4 times less risky than PVI Reinsurance. It trades about 0.05 of its potential returns per unit of risk. PVI Reinsurance Corp is currently generating about 0.02 per unit of risk. If you would invest 1,650,000 in PetroVietnam Drilling Well on September 2, 2024 and sell it today you would earn a total of 720,000 from holding PetroVietnam Drilling Well or generate 43.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.88% |
| Values | Daily Returns |
PetroVietnam Drilling Well vs. PVI Reinsurance Corp
Performance |
| Timeline |
| PetroVietnam Drilling |
| PVI Reinsurance Corp |
PetroVietnam Drilling and PVI Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroVietnam Drilling and PVI Reinsurance
The main advantage of trading using opposite PetroVietnam Drilling and PVI Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroVietnam Drilling position performs unexpectedly, PVI Reinsurance 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 PVI Reinsurance will offset losses from the drop in PVI Reinsurance'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 |
| PVI Reinsurance vs. TDT Investment and | PVI Reinsurance vs. Vu Dang Investment | PVI Reinsurance vs. Petrolimex Petrochemical JSC | PVI Reinsurance vs. Tien Giang 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.
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