Correlation Between Taseco Air and PetroVietnam Transportation

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

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

Diversification Opportunities for Taseco Air and PetroVietnam Transportation

0.45

Correlation Coefficient

Taseco Air  PetroVietnam Transportation

Very weak diversification

The 3 months correlation between Taseco and PetroVietnam is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Taseco Air Services and PetroVietnam Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Transportation and Taseco Air 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 Taseco Air Services are associated (or correlated) with PetroVietnam Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroVietnam Transportation has no effect on the direction of Taseco Air i.e., Taseco Air and PetroVietnam Transportation go up and down completely randomly.

Pair Corralation between Taseco Air and PetroVietnam Transportation

Assuming the 90 days trading horizon Taseco Air is expected to generate 6.58 times less return on investment than PetroVietnam Transportation. But when comparing it to its historical volatility, Taseco Air Services is 1.15 times less risky than PetroVietnam Transportation. It trades about 0.0 of its potential returns per unit of risk. PetroVietnam Transportation Corp is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,745,000  in PetroVietnam Transportation Corp on October 6, 2024 and sell it today you would earn a total of  30,000  from holding PetroVietnam Transportation Corp or generate 1.09% return on investment over 90 days.

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

Taseco Air Services  vs.  PetroVietnam Transportation Co

Taseco Air Services

Risk-Adjusted Performance

0 of 100

Very Weak

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

PetroVietnam Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Taseco Air and PetroVietnam Transportation

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

The idea behind Taseco Air Services and PetroVietnam Transportation 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.