Correlation Between Pacific Petroleum and Tay Ninh
Can any of the company-specific risk be diversified away by investing in both Pacific Petroleum and Tay Ninh 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 Pacific Petroleum and Tay Ninh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Petroleum Transportation and Tay Ninh Rubber, you can compare the effects of market volatilities on Pacific Petroleum and Tay Ninh 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 Pacific Petroleum with a short position of Tay Ninh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Tay Ninh.
Diversification Opportunities for Pacific Petroleum and Tay Ninh
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pacific and Tay is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and Tay Ninh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tay Ninh Rubber and Pacific Petroleum 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 Pacific Petroleum Transportation are associated (or correlated) with Tay Ninh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tay Ninh Rubber has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and Tay Ninh go up and down completely randomly.
Pair Corralation between Pacific Petroleum and Tay Ninh
Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to under-perform the Tay Ninh. But the stock apears to be less risky and, when comparing its historical volatility, Pacific Petroleum Transportation is 1.44 times less risky than Tay Ninh. The stock trades about -0.19 of its potential returns per unit of risk. The Tay Ninh Rubber is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 5,490,000 in Tay Ninh Rubber on October 30, 2024 and sell it today you would earn a total of 1,540,000 from holding Tay Ninh Rubber or generate 28.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pacific Petroleum Transportati vs. Tay Ninh Rubber
Performance |
| Timeline |
| Pacific Petroleum |
| Tay Ninh Rubber |
Pacific Petroleum and Tay Ninh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pacific Petroleum and Tay Ninh
The main advantage of trading using opposite Pacific Petroleum and Tay Ninh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Petroleum position performs unexpectedly, Tay Ninh 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 Tay Ninh will offset losses from the drop in Tay Ninh's long position.| Pacific Petroleum vs. Long Giang Investment | Pacific Petroleum vs. PV2 Investment JSC | Pacific Petroleum vs. Hanoi Beer Alcohol | Pacific Petroleum vs. Elcom Technology Communications |
| Tay Ninh vs. Truong Thanh Furniture | Tay Ninh vs. Nam Kim Steel | Tay Ninh vs. Vinhomes JSC | Tay Ninh vs. Post and Telecommunications |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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