Correlation Between Nafoods Group and Vietnam Petroleum

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

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

Diversification Opportunities for Nafoods Group and Vietnam Petroleum

-0.38

Correlation Coefficient

Nafoods Group  Vietnam Petroleum

Very good diversification

The 3 months correlation between Nafoods and Vietnam is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Nafoods Group 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 Nafoods Group 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 Nafoods Group 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 Nafoods Group i.e., Nafoods Group and Vietnam Petroleum go up and down completely randomly.

Pair Corralation between Nafoods Group and Vietnam Petroleum

Assuming the 90 days trading horizon Nafoods Group is expected to generate 1.77 times less return on investment than Vietnam Petroleum. In addition to that, Nafoods Group is 1.15 times more volatile than Vietnam Petroleum Transport. It trades about 0.04 of its total potential returns per unit of risk. Vietnam Petroleum Transport is currently generating about 0.09 per unit of volatility. If you would invest  1,295,000  in Vietnam Petroleum Transport on September 18, 2024 and sell it today you would earn a total of  115,000  from holding Vietnam Petroleum Transport or generate 8.88% return on investment over 90 days.

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

Nafoods Group JSC  vs.  Vietnam Petroleum Transport

Nafoods Group JSC

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nafoods Group JSC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Nafoods Group 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

6 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Petroleum Transport are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Petroleum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Nafoods Group and Vietnam Petroleum

The main advantage of trading using opposite Nafoods Group and Vietnam Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nafoods Group 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 Nafoods Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.