Correlation Between Sao Ta and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Sao Ta and Petrolimex Petrochemical 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 Sao Ta and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sao Ta Foods and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Sao Ta and Petrolimex Petrochemical 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 Sao Ta with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sao Ta and Petrolimex Petrochemical.
Diversification Opportunities for Sao Ta and Petrolimex Petrochemical
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Sao and Petrolimex is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Sao Ta Foods and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Sao Ta 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 Sao Ta Foods are associated (or correlated) with Petrolimex Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Petrochemical has no effect on the direction of Sao Ta i.e., Sao Ta and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Sao Ta and Petrolimex Petrochemical
Assuming the 90 days trading horizon Sao Ta is expected to generate 7.25 times less return on investment than Petrolimex Petrochemical. But when comparing it to its historical volatility, Sao Ta Foods is 2.02 times less risky than Petrolimex Petrochemical. It trades about 0.02 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,270,000 in Petrolimex Petrochemical JSC on December 28, 2024 and sell it today you would earn a total of 200,000 from holding Petrolimex Petrochemical JSC or generate 8.81% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Sao Ta Foods vs. Petrolimex Petrochemical JSC
Performance |
Timeline |
Sao Ta Foods |
Petrolimex Petrochemical |
Sao Ta and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Sao Ta and Petrolimex Petrochemical
The main advantage of trading using opposite Sao Ta and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sao Ta position performs unexpectedly, Petrolimex Petrochemical 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 Petrochemical will offset losses from the drop in Petrolimex Petrochemical's long position.Sao Ta vs. Techcom Vietnam REIT | Sao Ta vs. Petrovietnam Technical Services | Sao Ta vs. VTC Telecommunications JSC | Sao Ta vs. Investment and Industrial |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
Stocks Directory Find actively traded stocks across global markets | |
Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
CEOs Directory Screen CEOs from public companies around the world |