Correlation Between Materials Petroleum and Duong Hieu

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

By analyzing existing cross correlation between Materials Petroleum JSC and Duong Hieu Trading, you can compare the effects of market volatilities on Materials Petroleum and Duong Hieu 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 Materials Petroleum with a short position of Duong Hieu. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Petroleum and Duong Hieu.

Diversification Opportunities for Materials Petroleum and Duong Hieu

0.01

Correlation Coefficient

Materials Petroleum  Duong Hieu

Significant diversification

The 3 months correlation between Materials and Duong is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Materials Petroleum JSC and Duong Hieu Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duong Hieu Trading and Materials 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 Materials Petroleum JSC are associated (or correlated) with Duong Hieu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duong Hieu Trading has no effect on the direction of Materials Petroleum i.e., Materials Petroleum and Duong Hieu go up and down completely randomly.

Pair Corralation between Materials Petroleum and Duong Hieu

Assuming the 90 days trading horizon Materials Petroleum JSC is expected to generate 1.64 times more return on investment than Duong Hieu. However, Materials Petroleum is 1.64 times more volatile than Duong Hieu Trading. It trades about 0.01 of its potential returns per unit of risk. Duong Hieu Trading is currently generating about -0.05 per unit of risk. If you would invest  2,770,000  in Materials Petroleum JSC on October 26, 2024 and sell it today you would lose (10,000) from holding Materials Petroleum JSC or give up 0.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	52.38%
Values	Daily Returns

Materials Petroleum JSC  vs.  Duong Hieu Trading

Materials Petroleum JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Materials Petroleum JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Duong Hieu Trading

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Duong Hieu Trading are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Duong Hieu is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Materials Petroleum and Duong Hieu

The main advantage of trading using opposite Materials Petroleum and Duong Hieu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Materials Petroleum position performs unexpectedly, Duong Hieu 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 Duong Hieu will offset losses from the drop in Duong Hieu's long position.

The idea behind Materials Petroleum JSC and Duong Hieu Trading 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..