Correlation Between Japan Vietnam and PetroVietnam Transportation

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

By analyzing existing cross correlation between Japan Vietnam Medical and PetroVietnam Transportation Corp, you can compare the effects of market volatilities on Japan Vietnam and PetroVietnam Transportation 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 Japan Vietnam with a short position of PetroVietnam Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Vietnam and PetroVietnam Transportation.

Diversification Opportunities for Japan Vietnam and PetroVietnam Transportation

0.25

Correlation Coefficient

Japan Vietnam  PetroVietnam Transportation

Modest diversification

The 3 months correlation between Japan and PetroVietnam is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Japan Vietnam Medical and PetroVietnam Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Transportation and Japan Vietnam 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 Japan Vietnam Medical are associated (or correlated) with PetroVietnam Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroVietnam Transportation has no effect on the direction of Japan Vietnam i.e., Japan Vietnam and PetroVietnam Transportation go up and down completely randomly.

Pair Corralation between Japan Vietnam and PetroVietnam Transportation

Assuming the 90 days trading horizon Japan Vietnam Medical is expected to generate 1.79 times more return on investment than PetroVietnam Transportation. However, Japan Vietnam is 1.79 times more volatile than PetroVietnam Transportation Corp. It trades about 0.18 of its potential returns per unit of risk. PetroVietnam Transportation Corp is currently generating about 0.03 per unit of risk. If you would invest  330,000  in Japan Vietnam Medical on October 6, 2024 and sell it today you would earn a total of  52,000  from holding Japan Vietnam Medical or generate 15.76% return on investment over 90 days.

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

Japan Vietnam Medical  vs.  PetroVietnam Transportation Co

Japan Vietnam Medical

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Vietnam Medical are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Japan Vietnam displayed solid returns over the last few months and may actually be approaching a breakup point.

PetroVietnam Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroVietnam Transportation Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, PetroVietnam Transportation is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Japan Vietnam and PetroVietnam Transportation

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

The idea behind Japan Vietnam Medical and PetroVietnam Transportation Corp 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.