Correlation Between PetroVietnam Transportation and PVI Reinsurance
Can any of the company-specific risk be diversified away by investing in both PetroVietnam Transportation 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 Transportation 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 Transportation Corp and PVI Reinsurance Corp, you can compare the effects of market volatilities on PetroVietnam Transportation 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 Transportation with a short position of PVI Reinsurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Transportation and PVI Reinsurance.
Diversification Opportunities for PetroVietnam Transportation and PVI Reinsurance
-0.28 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PetroVietnam and PVI is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co 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 Transportation 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 Transportation Corp 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 Transportation i.e., PetroVietnam Transportation and PVI Reinsurance go up and down completely randomly.
Pair Corralation between PetroVietnam Transportation and PVI Reinsurance
Assuming the 90 days trading horizon PetroVietnam Transportation Corp is expected to under-perform the PVI Reinsurance. But the stock apears to be less risky and, when comparing its historical volatility, PetroVietnam Transportation Corp is 3.01 times less risky than PVI Reinsurance. The stock trades about -0.16 of its potential returns per unit of risk. The PVI Reinsurance Corp is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,960,000 in PVI Reinsurance Corp on November 7, 2024 and sell it today you would earn a total of 0.00 from holding PVI Reinsurance Corp or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 81.25% |
| Values | Daily Returns |
PetroVietnam Transportation Co vs. PVI Reinsurance Corp
Performance |
| Timeline |
| PetroVietnam Transportation |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| PVI Reinsurance Corp |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
PetroVietnam Transportation and PVI Reinsurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroVietnam Transportation and PVI Reinsurance
The main advantage of trading using opposite PetroVietnam Transportation and PVI Reinsurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroVietnam Transportation 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.The idea behind PetroVietnam Transportation Corp and PVI Reinsurance Corp 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.
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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