Correlation Between PVI Reinsurance and Phuoc Hoa

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

By analyzing existing cross correlation between PVI Reinsurance Corp and Phuoc Hoa Rubber, you can compare the effects of market volatilities on PVI Reinsurance and Phuoc Hoa 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 PVI Reinsurance with a short position of Phuoc Hoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of PVI Reinsurance and Phuoc Hoa.

Diversification Opportunities for PVI Reinsurance and Phuoc Hoa

-0.34

Correlation Coefficient

PVI Reinsurance  Phuoc Hoa

Very good diversification

The 3 months correlation between PVI and Phuoc is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding PVI Reinsurance Corp and Phuoc Hoa Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phuoc Hoa Rubber and PVI Reinsurance 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 PVI Reinsurance Corp are associated (or correlated) with Phuoc Hoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phuoc Hoa Rubber has no effect on the direction of PVI Reinsurance i.e., PVI Reinsurance and Phuoc Hoa go up and down completely randomly.

Pair Corralation between PVI Reinsurance and Phuoc Hoa

Assuming the 90 days trading horizon PVI Reinsurance Corp is expected to generate 1.06 times more return on investment than Phuoc Hoa. However, PVI Reinsurance is 1.06 times more volatile than Phuoc Hoa Rubber. It trades about 0.04 of its potential returns per unit of risk. Phuoc Hoa Rubber is currently generating about -0.06 per unit of risk. If you would invest  1,900,000  in PVI Reinsurance Corp on October 7, 2024 and sell it today you would earn a total of  110,000  from holding PVI Reinsurance Corp or generate 5.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.98%
Values	Daily Returns

PVI Reinsurance Corp  vs.  Phuoc Hoa Rubber

PVI Reinsurance Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in PVI Reinsurance Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, PVI Reinsurance displayed solid returns over the last few months and may actually be approaching a breakup point.

Phuoc Hoa Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PVI Reinsurance and Phuoc Hoa

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

The idea behind PVI Reinsurance Corp and Phuoc Hoa Rubber 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.