Correlation Between HVC Investment and Petrovietnam Technical

Can any of the company-specific risk be diversified away by investing in both HVC Investment and Petrovietnam Technical 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 HVC Investment and Petrovietnam Technical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HVC Investment and and Petrovietnam Technical Services, you can compare the effects of market volatilities on HVC Investment and Petrovietnam Technical 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 HVC Investment with a short position of Petrovietnam Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of HVC Investment and Petrovietnam Technical.

Diversification Opportunities for HVC Investment and Petrovietnam Technical

-0.28

Correlation Coefficient

HVC Investment  Petrovietnam Technical

Very good diversification

The 3 months correlation between HVC and Petrovietnam is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding HVC Investment and and Petrovietnam Technical Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrovietnam Technical and HVC Investment 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 HVC Investment and are associated (or correlated) with Petrovietnam Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrovietnam Technical has no effect on the direction of HVC Investment i.e., HVC Investment and Petrovietnam Technical go up and down completely randomly.

Pair Corralation between HVC Investment and Petrovietnam Technical

Assuming the 90 days trading horizon HVC Investment and is expected to generate 1.95 times more return on investment than Petrovietnam Technical. However, HVC Investment is 1.95 times more volatile than Petrovietnam Technical Services. It trades about 0.11 of its potential returns per unit of risk. Petrovietnam Technical Services is currently generating about -0.11 per unit of risk. If you would invest  815,000  in HVC Investment and on September 21, 2024 and sell it today you would earn a total of  235,000  from holding HVC Investment and or generate 28.83% return on investment over 90 days.

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

HVC Investment and  vs.  Petrovietnam Technical Service

HVC Investment

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in HVC Investment and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, HVC Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Petrovietnam Technical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrovietnam Technical Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with HVC Investment and Petrovietnam Technical

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

The idea behind HVC Investment and and Petrovietnam Technical Services 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.