Correlation Between CEO Group and Vietnam Petroleum

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

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

Diversification Opportunities for CEO Group and Vietnam Petroleum

-0.69

Correlation Coefficient

CEO Group  Vietnam Petroleum

Excellent diversification

The 3 months correlation between CEO and Vietnam is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding CEO Group JSC and Vietnam Petroleum Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Petroleum and CEO Group 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 CEO Group JSC 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 CEO Group i.e., CEO Group and Vietnam Petroleum go up and down completely randomly.

Pair Corralation between CEO Group and Vietnam Petroleum

Assuming the 90 days trading horizon CEO Group JSC is expected to under-perform the Vietnam Petroleum. But the stock apears to be less risky and, when comparing its historical volatility, CEO Group JSC is 1.1 times less risky than Vietnam Petroleum. The stock trades about -0.05 of its potential returns per unit of risk. The Vietnam Petroleum Transport is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  1,470,000  in Vietnam Petroleum Transport on September 17, 2024 and sell it today you would lose (35,000) from holding Vietnam Petroleum Transport or give up 2.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	99.21%
Values	Daily Returns

CEO Group JSC  vs.  Vietnam Petroleum Transport

CEO Group JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CEO Group JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Vietnam Petroleum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Petroleum Transport are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Petroleum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CEO Group and Vietnam Petroleum

The main advantage of trading using opposite CEO Group and Vietnam Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEO Group 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 CEO Group JSC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.