Correlation Between FIT INVEST and Vietnam Petroleum

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

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

Diversification Opportunities for FIT INVEST and Vietnam Petroleum

-0.47

Correlation Coefficient

FIT INVEST  Vietnam Petroleum

Very good diversification

The 3 months correlation between FIT and Vietnam is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding FIT INVEST 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 FIT INVEST 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 FIT INVEST 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 FIT INVEST i.e., FIT INVEST and Vietnam Petroleum go up and down completely randomly.

Pair Corralation between FIT INVEST and Vietnam Petroleum

Assuming the 90 days trading horizon FIT INVEST is expected to generate 4.76 times less return on investment than Vietnam Petroleum. But when comparing it to its historical volatility, FIT INVEST JSC is 1.18 times less risky than Vietnam Petroleum. It trades about 0.03 of its potential returns per unit of risk. Vietnam Petroleum Transport is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  1,270,000  in Vietnam Petroleum Transport on September 15, 2024 and sell it today you would earn a total of  165,000  from holding Vietnam Petroleum Transport or generate 12.99% return on investment over 90 days.

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

FIT INVEST JSC  vs.  Vietnam Petroleum Transport

FIT INVEST JSC

Risk-Adjusted Performance

2 of 100

Weak

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

The main advantage of trading using opposite FIT INVEST and Vietnam Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FIT INVEST 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 FIT INVEST 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.

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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.