Correlation Between Petrolimex Insurance and Hanoi Beer

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

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

Diversification Opportunities for Petrolimex Insurance and Hanoi Beer

-0.28

Correlation Coefficient

Petrolimex Insurance  Hanoi Beer

Very good diversification

The 3 months correlation between Petrolimex and Hanoi is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Insurance Corp and Hanoi Beer Alcohol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Beer Alcohol and Petrolimex Insurance 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 Petrolimex Insurance Corp are associated (or correlated) with Hanoi Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Beer Alcohol has no effect on the direction of Petrolimex Insurance i.e., Petrolimex Insurance and Hanoi Beer go up and down completely randomly.

Pair Corralation between Petrolimex Insurance and Hanoi Beer

Assuming the 90 days trading horizon Petrolimex Insurance Corp is expected to under-perform the Hanoi Beer. In addition to that, Petrolimex Insurance is 1.41 times more volatile than Hanoi Beer Alcohol. It trades about -0.04 of its total potential returns per unit of risk. Hanoi Beer Alcohol is currently generating about -0.01 per unit of volatility. If you would invest  3,800,000  in Hanoi Beer Alcohol on September 14, 2024 and sell it today you would lose (50,000) from holding Hanoi Beer Alcohol or give up 1.32% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.11%
Values	Daily Returns

Petrolimex Insurance Corp  vs.  Hanoi Beer Alcohol

Petrolimex Insurance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Hanoi Beer Alcohol

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Petrolimex Insurance and Hanoi Beer

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

The idea behind Petrolimex Insurance Corp and Hanoi Beer Alcohol 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.