Correlation Between Petrolimex Information and Vietnam National

Can any of the company-specific risk be diversified away by investing in both Petrolimex Information and Vietnam National 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 Vietnam National 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 Vietnam National Reinsurance, you can compare the effects of market volatilities on Petrolimex Information and Vietnam National 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 Vietnam National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Information and Vietnam National.

Diversification Opportunities for Petrolimex Information and Vietnam National

0.46

Correlation Coefficient

Petrolimex Information  Vietnam National

Very weak diversification

The 3 months correlation between Petrolimex and Vietnam is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Information Technol and Vietnam National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam National Rei 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 Vietnam National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam National Rei has no effect on the direction of Petrolimex Information i.e., Petrolimex Information and Vietnam National go up and down completely randomly.

Pair Corralation between Petrolimex Information and Vietnam National

Assuming the 90 days trading horizon Petrolimex Information Technology is expected to generate 1.68 times more return on investment than Vietnam National. However, Petrolimex Information is 1.68 times more volatile than Vietnam National Reinsurance. It trades about 0.14 of its potential returns per unit of risk. Vietnam National Reinsurance is currently generating about 0.13 per unit of risk. If you would invest  2,720,000  in Petrolimex Information Technology on December 30, 2024 and sell it today you would earn a total of  280,000  from holding Petrolimex Information Technology or generate 10.29% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	52.54%
Values	Daily Returns

Petrolimex Information Technol  vs.  Vietnam National Reinsurance

Petrolimex Information

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex Information Technology are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrolimex Information displayed solid returns over the last few months and may actually be approaching a breakup point.

Vietnam National Rei

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam National Reinsurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam National may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Petrolimex Information and Vietnam National

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

The idea behind Petrolimex Information Technology and Vietnam National Reinsurance 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.