Correlation Between Vietnam Dairy and PetroVietnam Drilling
Can any of the company-specific risk be diversified away by investing in both Vietnam Dairy 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 Vietnam Dairy and PetroVietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam Dairy Products and PetroVietnam Drilling Well, you can compare the effects of market volatilities on Vietnam Dairy 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 Vietnam Dairy with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Dairy and PetroVietnam Drilling.
Diversification Opportunities for Vietnam Dairy and PetroVietnam Drilling
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Vietnam and PetroVietnam is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Dairy Products and PetroVietnam Drilling Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Drilling and Vietnam Dairy 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 Vietnam Dairy Products 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 has no effect on the direction of Vietnam Dairy i.e., Vietnam Dairy and PetroVietnam Drilling go up and down completely randomly.
Pair Corralation between Vietnam Dairy and PetroVietnam Drilling
Assuming the 90 days trading horizon Vietnam Dairy Products is expected to under-perform the PetroVietnam Drilling. But the stock apears to be less risky and, when comparing its historical volatility, Vietnam Dairy Products is 1.76 times less risky than PetroVietnam Drilling. The stock trades about -0.03 of its potential returns per unit of risk. The PetroVietnam Drilling Well is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,090,000 in PetroVietnam Drilling Well on October 12, 2024 and sell it today you would earn a total of 125,000 from holding PetroVietnam Drilling Well or generate 5.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Dairy Products vs. PetroVietnam Drilling Well
Performance |
| Timeline |
| Vietnam Dairy Products |
| PetroVietnam Drilling |
Vietnam Dairy and PetroVietnam Drilling Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Dairy and PetroVietnam Drilling
The main advantage of trading using opposite Vietnam Dairy and PetroVietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Dairy 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.| Vietnam Dairy vs. Petrolimex Petrochemical JSC | Vietnam Dairy vs. VTC Telecommunications JSC | Vietnam Dairy vs. Tri Viet Management | Vietnam Dairy vs. PetroVietnam Drilling Well |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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