Correlation Between Alphanam and Petrovietnam Drilling

Can any of the company-specific risk be diversified away by investing in both Alphanam 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 Alphanam and Petrovietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Alphanam ME and Petrovietnam Drilling Mud, you can compare the effects of market volatilities on Alphanam 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 Alphanam with a short position of Petrovietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and Petrovietnam Drilling.

Diversification Opportunities for Alphanam and Petrovietnam Drilling

-0.28

Correlation Coefficient

Alphanam  Petrovietnam Drilling

Very good diversification

The 3 months correlation between Alphanam and Petrovietnam is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME 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 Alphanam 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 Alphanam ME 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 Alphanam i.e., Alphanam and Petrovietnam Drilling go up and down completely randomly.

Pair Corralation between Alphanam and Petrovietnam Drilling

Assuming the 90 days trading horizon Alphanam is expected to generate 6.91 times less return on investment than Petrovietnam Drilling. In addition to that, Alphanam is 1.3 times more volatile than Petrovietnam Drilling Mud. It trades about 0.01 of its total potential returns per unit of risk. Petrovietnam Drilling Mud is currently generating about 0.09 per unit of volatility. If you would invest  1,040,000  in Petrovietnam Drilling Mud on December 2, 2024 and sell it today you would earn a total of  90,000  from holding Petrovietnam Drilling Mud or generate 8.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.15%
Values	Daily Returns

Alphanam ME  vs.  Petrovietnam Drilling Mud

Alphanam ME

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alphanam ME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Alphanam is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Petrovietnam Drilling Mud

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petrovietnam Drilling Mud are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Petrovietnam Drilling may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Alphanam and Petrovietnam Drilling

The main advantage of trading using opposite Alphanam and Petrovietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alphanam 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 Alphanam ME 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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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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.