Correlation Between Petrolimex Information and Tien Phong

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

By analyzing existing cross correlation between Petrolimex Information Technology and Tien Phong Plastic, you can compare the effects of market volatilities on Petrolimex Information and Tien Phong 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 Information with a short position of Tien Phong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Information and Tien Phong.

Diversification Opportunities for Petrolimex Information and Tien Phong

-0.37

Correlation Coefficient

Petrolimex Information  Tien Phong

Very good diversification

The 3 months correlation between Petrolimex and Tien is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol and Tien Phong Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tien Phong Plastic and Petrolimex Information 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 Information Technology are associated (or correlated) with Tien Phong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tien Phong Plastic has no effect on the direction of Petrolimex Information i.e., Petrolimex Information and Tien Phong go up and down completely randomly.

Pair Corralation between Petrolimex Information and Tien Phong

Assuming the 90 days trading horizon Petrolimex Information Technology is expected to generate 2.34 times more return on investment than Tien Phong. However, Petrolimex Information is 2.34 times more volatile than Tien Phong Plastic. It trades about 0.11 of its potential returns per unit of risk. Tien Phong Plastic is currently generating about 0.06 per unit of risk. If you would invest  2,660,000  in Petrolimex Information Technology on October 22, 2024 and sell it today you would earn a total of  220,000  from holding Petrolimex Information Technology or generate 8.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	51.22%
Values	Daily Returns

Petrolimex Information Technol  vs.  Tien Phong Plastic

Petrolimex Information

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Information Technology are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrolimex Information may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Tien Phong Plastic

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tien Phong Plastic are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Tien Phong is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Petrolimex Information and Tien Phong

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

The idea behind Petrolimex Information Technology and Tien Phong Plastic 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.