Correlation Between PetroVietnam Drilling and Military Insurance

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

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

Diversification Opportunities for PetroVietnam Drilling and Military Insurance

-0.41

Correlation Coefficient

PetroVietnam Drilling  Military Insurance

Very good diversification

The 3 months correlation between PetroVietnam and Military is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Drilling Well and Military Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Military Insurance Corp 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 Well are associated (or correlated) with Military Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Military Insurance Corp has no effect on the direction of PetroVietnam Drilling i.e., PetroVietnam Drilling and Military Insurance go up and down completely randomly.

Pair Corralation between PetroVietnam Drilling and Military Insurance

Assuming the 90 days trading horizon PetroVietnam Drilling Well is expected to under-perform the Military Insurance. But the stock apears to be less risky and, when comparing its historical volatility, PetroVietnam Drilling Well is 1.46 times less risky than Military Insurance. The stock trades about -0.16 of its potential returns per unit of risk. The Military Insurance Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,660,000  in Military Insurance Corp on September 29, 2024 and sell it today you would earn a total of  90,000  from holding Military Insurance Corp or generate 5.42% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

PetroVietnam Drilling Well  vs.  Military Insurance Corp

PetroVietnam Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroVietnam Drilling Well has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Military Insurance Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Military Insurance Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Military Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PetroVietnam Drilling and Military Insurance

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

The idea behind PetroVietnam Drilling Well and Military 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.