Correlation Between Transimex Transportation and Petrovietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Transimex Transportation and Petrovietnam Drilling 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 Transimex Transportation and Petrovietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transimex Transportation JSC and Petrovietnam Drilling Mud, you can compare the effects of market volatilities on Transimex Transportation and Petrovietnam Drilling 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 Transimex Transportation with a short position of Petrovietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transimex Transportation and Petrovietnam Drilling.
Diversification Opportunities for Transimex Transportation and Petrovietnam Drilling
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Transimex and Petrovietnam is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Transimex Transportation JSC and Petrovietnam Drilling Mud in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrovietnam Drilling Mud and Transimex 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 Transimex Transportation JSC are associated (or correlated) with Petrovietnam Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrovietnam Drilling Mud has no effect on the direction of Transimex Transportation i.e., Transimex Transportation and Petrovietnam Drilling go up and down completely randomly.
Pair Corralation between Transimex Transportation and Petrovietnam Drilling
Assuming the 90 days trading horizon Transimex Transportation JSC is expected to generate 1.27 times more return on investment than Petrovietnam Drilling. However, Transimex Transportation is 1.27 times more volatile than Petrovietnam Drilling Mud. It trades about 0.03 of its potential returns per unit of risk. Petrovietnam Drilling Mud is currently generating about -0.06 per unit of risk. If you would invest 1,549,307 in Transimex Transportation JSC on August 27, 2024 and sell it today you would earn a total of 180,693 from holding Transimex Transportation JSC or generate 11.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 80.33% |
| Values | Daily Returns |
Transimex Transportation JSC vs. Petrovietnam Drilling Mud
Performance |
| Timeline |
| Transimex Transportation |
| Petrovietnam Drilling Mud |
Transimex Transportation and Petrovietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transimex Transportation and Petrovietnam Drilling
The main advantage of trading using opposite Transimex Transportation and Petrovietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transimex Transportation position performs unexpectedly, Petrovietnam Drilling 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 Petrovietnam Drilling will offset losses from the drop in Petrovietnam Drilling's long position.The idea behind Transimex Transportation JSC and Petrovietnam Drilling Mud 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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