Correlation Between Petrovietnam Drilling and Alphanam

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

By analyzing existing cross correlation between Petrovietnam Drilling Mud and Alphanam ME, you can compare the effects of market volatilities on Petrovietnam Drilling and Alphanam 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 Petrovietnam Drilling with a short position of Alphanam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrovietnam Drilling and Alphanam.

Diversification Opportunities for Petrovietnam Drilling and Alphanam

-0.05

Correlation Coefficient

Petrovietnam Drilling  Alphanam

Good diversification

The 3 months correlation between Petrovietnam and Alphanam is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Drilling Mud and Alphanam ME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alphanam ME and Petrovietnam Drilling 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 Petrovietnam Drilling Mud are associated (or correlated) with Alphanam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alphanam ME has no effect on the direction of Petrovietnam Drilling i.e., Petrovietnam Drilling and Alphanam go up and down completely randomly.

Pair Corralation between Petrovietnam Drilling and Alphanam

Assuming the 90 days trading horizon Petrovietnam Drilling is expected to generate 13.55 times less return on investment than Alphanam. But when comparing it to its historical volatility, Petrovietnam Drilling Mud is 2.81 times less risky than Alphanam. It trades about 0.07 of its potential returns per unit of risk. Alphanam ME is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  480,000  in Alphanam ME on December 27, 2024 and sell it today you would earn a total of  200,000  from holding Alphanam ME or generate 41.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.45%
Values	Daily Returns

Petrovietnam Drilling Mud  vs.  Alphanam ME

Petrovietnam Drilling Mud

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Petrovietnam Drilling Mud are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Petrovietnam Drilling is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Alphanam ME

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphanam ME are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Alphanam displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrovietnam Drilling and Alphanam

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

The idea behind Petrovietnam Drilling Mud and Alphanam ME 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..