Correlation Between Pacific Petroleum and Vietnam Construction
Can any of the company-specific risk be diversified away by investing in both Pacific Petroleum and Vietnam Construction 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 Pacific Petroleum and Vietnam Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pacific Petroleum Transportation and Vietnam Construction JSC, you can compare the effects of market volatilities on Pacific Petroleum and Vietnam Construction 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 Pacific Petroleum with a short position of Vietnam Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Vietnam Construction.
Diversification Opportunities for Pacific Petroleum and Vietnam Construction
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Pacific and Vietnam is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and Vietnam Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Construction JSC and Pacific Petroleum 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 Pacific Petroleum Transportation are associated (or correlated) with Vietnam Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Construction JSC has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and Vietnam Construction go up and down completely randomly.
Pair Corralation between Pacific Petroleum and Vietnam Construction
Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to generate 1.3 times more return on investment than Vietnam Construction. However, Pacific Petroleum is 1.3 times more volatile than Vietnam Construction JSC. It trades about 0.06 of its potential returns per unit of risk. Vietnam Construction JSC is currently generating about 0.02 per unit of risk. If you would invest 1,056,557 in Pacific Petroleum Transportation on October 11, 2024 and sell it today you would earn a total of 673,443 from holding Pacific Petroleum Transportation or generate 63.74% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Pacific Petroleum Transportati vs. Vietnam Construction JSC
Performance |
Timeline |
Pacific Petroleum |
Vietnam Construction JSC |
Pacific Petroleum and Vietnam Construction Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Pacific Petroleum and Vietnam Construction
The main advantage of trading using opposite Pacific Petroleum and Vietnam Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pacific Petroleum position performs unexpectedly, Vietnam Construction 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 Vietnam Construction will offset losses from the drop in Vietnam Construction's long position.Pacific Petroleum vs. Van Dien Fused | Pacific Petroleum vs. Hochiminh City Metal | Pacific Petroleum vs. Atesco Industrial Cartering | Pacific Petroleum vs. Danang Education Investment |
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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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