Correlation Between PetroVietnam Drilling and Transport
Can any of the company-specific risk be diversified away by investing in both PetroVietnam Drilling and Transport 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 Transport 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 Transport and Industry, you can compare the effects of market volatilities on PetroVietnam Drilling and Transport 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 Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Drilling and Transport.
Diversification Opportunities for PetroVietnam Drilling and Transport
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between PetroVietnam and Transport is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Drilling Well and Transport and Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Industry 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport and Industry has no effect on the direction of PetroVietnam Drilling i.e., PetroVietnam Drilling and Transport go up and down completely randomly.
Pair Corralation between PetroVietnam Drilling and Transport
Assuming the 90 days trading horizon PetroVietnam Drilling Well is expected to generate 1.29 times more return on investment than Transport. However, PetroVietnam Drilling is 1.29 times more volatile than Transport and Industry. It trades about 0.13 of its potential returns per unit of risk. Transport and Industry is currently generating about 0.01 per unit of risk. If you would invest 2,420,000 in PetroVietnam Drilling Well on September 13, 2024 and sell it today you would earn a total of 115,000 from holding PetroVietnam Drilling Well or generate 4.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroVietnam Drilling Well vs. Transport and Industry
Performance |
| Timeline |
| PetroVietnam Drilling |
| Transport and Industry |
PetroVietnam Drilling and Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroVietnam Drilling and Transport
The main advantage of trading using opposite PetroVietnam Drilling and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroVietnam Drilling position performs unexpectedly, Transport 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 Transport will offset losses from the drop in Transport's long position.| PetroVietnam Drilling vs. FIT INVEST JSC | PetroVietnam Drilling vs. Damsan JSC | PetroVietnam Drilling vs. An Phat Plastic | PetroVietnam Drilling vs. Alphanam ME |
| Transport vs. FIT INVEST JSC | Transport vs. Damsan JSC | Transport vs. An Phat Plastic | Transport vs. Alphanam ME |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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