Correlation Between Joint Stock and Vietnam Petroleum

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

By analyzing existing cross correlation between Joint Stock Commercial and Vietnam Petroleum Transport, you can compare the effects of market volatilities on Joint Stock and Vietnam Petroleum 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 Joint Stock with a short position of Vietnam Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Joint Stock and Vietnam Petroleum.

Diversification Opportunities for Joint Stock and Vietnam Petroleum

-0.72

Correlation Coefficient

Joint Stock  Vietnam Petroleum

Pay attention - limited upside

The 3 months correlation between Joint and Vietnam is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Joint Stock Commercial and Vietnam Petroleum Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Petroleum and Joint Stock 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 Joint Stock Commercial are associated (or correlated) with Vietnam Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Petroleum has no effect on the direction of Joint Stock i.e., Joint Stock and Vietnam Petroleum go up and down completely randomly.

Pair Corralation between Joint Stock and Vietnam Petroleum

Assuming the 90 days trading horizon Joint Stock is expected to generate 5.92 times less return on investment than Vietnam Petroleum. But when comparing it to its historical volatility, Joint Stock Commercial is 1.33 times less risky than Vietnam Petroleum. It trades about 0.01 of its potential returns per unit of risk. Vietnam Petroleum Transport is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  812,656  in Vietnam Petroleum Transport on October 24, 2024 and sell it today you would earn a total of  587,344  from holding Vietnam Petroleum Transport or generate 72.27% return on investment over 90 days.

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

Joint Stock Commercial  vs.  Vietnam Petroleum Transport

Joint Stock Commercial

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Joint Stock Commercial 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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vietnam Petroleum

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Petroleum Transport are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Petroleum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Joint Stock and Vietnam Petroleum

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

The idea behind Joint Stock Commercial and Vietnam Petroleum Transport 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.

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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.