Correlation Between Japan Vietnam and Petrolimex Insurance

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

By analyzing existing cross correlation between Japan Vietnam Medical and Petrolimex Insurance Corp, you can compare the effects of market volatilities on Japan Vietnam and Petrolimex Insurance 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 Japan Vietnam with a short position of Petrolimex Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Vietnam and Petrolimex Insurance.

Diversification Opportunities for Japan Vietnam and Petrolimex Insurance

0.71

Correlation Coefficient

Japan Vietnam  Petrolimex Insurance

Poor diversification

The 3 months correlation between Japan and Petrolimex is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Japan Vietnam Medical and Petrolimex Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Insurance Corp and Japan Vietnam 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 Japan Vietnam Medical are associated (or correlated) with Petrolimex Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Insurance Corp has no effect on the direction of Japan Vietnam i.e., Japan Vietnam and Petrolimex Insurance go up and down completely randomly.

Pair Corralation between Japan Vietnam and Petrolimex Insurance

Assuming the 90 days trading horizon Japan Vietnam Medical is expected to generate 0.69 times more return on investment than Petrolimex Insurance. However, Japan Vietnam Medical is 1.45 times less risky than Petrolimex Insurance. It trades about 0.24 of its potential returns per unit of risk. Petrolimex Insurance Corp is currently generating about 0.07 per unit of risk. If you would invest  320,000  in Japan Vietnam Medical on December 5, 2024 and sell it today you would earn a total of  122,000  from holding Japan Vietnam Medical or generate 38.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	56.9%
Values	Daily Returns

Japan Vietnam Medical  vs.  Petrolimex Insurance Corp

Japan Vietnam Medical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Vietnam Medical are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Japan Vietnam displayed solid returns over the last few months and may actually be approaching a breakup point.

Petrolimex Insurance Corp

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Insurance Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Petrolimex Insurance displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Japan Vietnam and Petrolimex Insurance

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

The idea behind Japan Vietnam Medical and Petrolimex Insurance Corp 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.