Correlation Between South Basic and Petrovietnam Technical
Can any of the company-specific risk be diversified away by investing in both South Basic and Petrovietnam Technical 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 South Basic and Petrovietnam Technical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Basic Chemicals and Petrovietnam Technical Services, you can compare the effects of market volatilities on South Basic and Petrovietnam Technical 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 South Basic with a short position of Petrovietnam Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Basic and Petrovietnam Technical.
Diversification Opportunities for South Basic and Petrovietnam Technical
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between South and Petrovietnam is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and Petrovietnam Technical Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrovietnam Technical and South Basic 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 South Basic Chemicals are associated (or correlated) with Petrovietnam Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrovietnam Technical has no effect on the direction of South Basic i.e., South Basic and Petrovietnam Technical go up and down completely randomly.
Pair Corralation between South Basic and Petrovietnam Technical
Assuming the 90 days trading horizon South Basic Chemicals is expected to generate 2.33 times more return on investment than Petrovietnam Technical. However, South Basic is 2.33 times more volatile than Petrovietnam Technical Services. It trades about 0.32 of its potential returns per unit of risk. Petrovietnam Technical Services is currently generating about -0.04 per unit of risk. If you would invest 3,800,000 in South Basic Chemicals on October 3, 2024 and sell it today you would earn a total of 770,000 from holding South Basic Chemicals or generate 20.26% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
South Basic Chemicals vs. Petrovietnam Technical Service
Performance |
Timeline |
South Basic Chemicals |
Petrovietnam Technical |
South Basic and Petrovietnam Technical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with South Basic and Petrovietnam Technical
The main advantage of trading using opposite South Basic and Petrovietnam Technical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Basic position performs unexpectedly, Petrovietnam Technical 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 Technical will offset losses from the drop in Petrovietnam Technical's long position.South Basic vs. FIT INVEST JSC | South Basic vs. Damsan JSC | South Basic vs. An Phat Plastic | South Basic vs. Alphanam ME |
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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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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