Correlation Between Viettel Construction and Petrolimex Information

Can any of the company-specific risk be diversified away by investing in both Viettel Construction and Petrolimex Information 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 Viettel Construction and Petrolimex Information into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Viettel Construction JSC and Petrolimex Information Technology, you can compare the effects of market volatilities on Viettel Construction and Petrolimex Information 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 Viettel Construction with a short position of Petrolimex Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viettel Construction and Petrolimex Information.

Diversification Opportunities for Viettel Construction and Petrolimex Information

0.24

Correlation Coefficient

Viettel Construction  Petrolimex Information

Modest diversification

The 3 months correlation between Viettel and Petrolimex is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Viettel Construction JSC and Petrolimex Information Technol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Information and Viettel Construction 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 Viettel Construction JSC are associated (or correlated) with Petrolimex Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Information has no effect on the direction of Viettel Construction i.e., Viettel Construction and Petrolimex Information go up and down completely randomly.

Pair Corralation between Viettel Construction and Petrolimex Information

Assuming the 90 days trading horizon Viettel Construction is expected to generate 2.54 times less return on investment than Petrolimex Information. But when comparing it to its historical volatility, Viettel Construction JSC is 1.86 times less risky than Petrolimex Information. It trades about 0.03 of its potential returns per unit of risk. Petrolimex Information Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,790,000  in Petrolimex Information Technology on October 27, 2024 and sell it today you would earn a total of  100,000  from holding Petrolimex Information Technology or generate 3.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	53.13%
Values	Daily Returns

Viettel Construction JSC  vs.  Petrolimex Information Technol

Viettel Construction JSC

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Viettel Construction JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Viettel Construction is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Petrolimex Information

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Information Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrolimex Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Viettel Construction and Petrolimex Information

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

The idea behind Viettel Construction JSC and Petrolimex Information Technology 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.