Correlation Between Materials Petroleum and Saigon Telecommunicatio

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

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

Diversification Opportunities for Materials Petroleum and Saigon Telecommunicatio

-0.27

Correlation Coefficient

Materials Petroleum  Saigon Telecommunicatio

Very good diversification

The 3 months correlation between Materials and Saigon is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding Materials Petroleum JSC and Saigon Telecommunication Techn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saigon Telecommunicatio and Materials 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 Materials Petroleum JSC are associated (or correlated) with Saigon Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saigon Telecommunicatio has no effect on the direction of Materials Petroleum i.e., Materials Petroleum and Saigon Telecommunicatio go up and down completely randomly.

Pair Corralation between Materials Petroleum and Saigon Telecommunicatio

Assuming the 90 days trading horizon Materials Petroleum is expected to generate 4.1 times less return on investment than Saigon Telecommunicatio. In addition to that, Materials Petroleum is 2.19 times more volatile than Saigon Telecommunication Technologies. It trades about 0.01 of its total potential returns per unit of risk. Saigon Telecommunication Technologies is currently generating about 0.1 per unit of volatility. If you would invest  1,375,000  in Saigon Telecommunication Technologies on October 4, 2024 and sell it today you would earn a total of  350,000  from holding Saigon Telecommunication Technologies or generate 25.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	68.25%
Values	Daily Returns

Materials Petroleum JSC  vs.  Saigon Telecommunication Techn

Materials Petroleum JSC

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Materials Petroleum JSC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Materials Petroleum displayed solid returns over the last few months and may actually be approaching a breakup point.

Saigon Telecommunicatio

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Saigon Telecommunication Technologies are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Saigon Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Materials Petroleum and Saigon Telecommunicatio

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

The idea behind Materials Petroleum JSC and Saigon Telecommunication Technologies 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 Anywhere module to track or share privately all of your investments from the convenience of any device.