Correlation Between Petrolimex Insurance and Techcom Vietnam

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

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

Diversification Opportunities for Petrolimex Insurance and Techcom Vietnam

0.3

Correlation Coefficient

Petrolimex Insurance  Techcom Vietnam

Weak diversification

The 3 months correlation between Petrolimex and Techcom is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Insurance Corp and Techcom Vietnam REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techcom Vietnam REIT and Petrolimex Insurance 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 Petrolimex Insurance Corp are associated (or correlated) with Techcom Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techcom Vietnam REIT has no effect on the direction of Petrolimex Insurance i.e., Petrolimex Insurance and Techcom Vietnam go up and down completely randomly.

Pair Corralation between Petrolimex Insurance and Techcom Vietnam

Assuming the 90 days trading horizon Petrolimex Insurance Corp is expected to generate 0.98 times more return on investment than Techcom Vietnam. However, Petrolimex Insurance Corp is 1.02 times less risky than Techcom Vietnam. It trades about 0.07 of its potential returns per unit of risk. Techcom Vietnam REIT is currently generating about 0.04 per unit of risk. If you would invest  2,300,000  in Petrolimex Insurance Corp on September 17, 2024 and sell it today you would earn a total of  50,000  from holding Petrolimex Insurance Corp or generate 2.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	92.31%
Values	Daily Returns

Petrolimex Insurance Corp  vs.  Techcom Vietnam REIT

Petrolimex Insurance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Techcom Vietnam REIT

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Techcom Vietnam REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong basic indicators, Techcom Vietnam is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Petrolimex Insurance and Techcom Vietnam

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

The idea behind Petrolimex Insurance Corp and Techcom Vietnam REIT 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.