Correlation Between Petrolimex International and Vietnam JSCmmercial

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

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

Diversification Opportunities for Petrolimex International and Vietnam JSCmmercial

0.67

Correlation Coefficient

Petrolimex International  Vietnam JSCmmercial

Poor diversification

The 3 months correlation between Petrolimex and Vietnam is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex International Tradi and Vietnam JSCmmercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam JSCmmercial Bank and Petrolimex International 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 International Trading are associated (or correlated) with Vietnam JSCmmercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam JSCmmercial Bank has no effect on the direction of Petrolimex International i.e., Petrolimex International and Vietnam JSCmmercial go up and down completely randomly.

Pair Corralation between Petrolimex International and Vietnam JSCmmercial

Assuming the 90 days trading horizon Petrolimex International is expected to generate 1.27 times less return on investment than Vietnam JSCmmercial. In addition to that, Petrolimex International is 1.49 times more volatile than Vietnam JSCmmercial Bank. It trades about 0.05 of its total potential returns per unit of risk. Vietnam JSCmmercial Bank is currently generating about 0.09 per unit of volatility. If you would invest  3,460,000  in Vietnam JSCmmercial Bank on October 25, 2024 and sell it today you would earn a total of  270,000  from holding Vietnam JSCmmercial Bank or generate 7.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	93.65%
Values	Daily Returns

Petrolimex International Tradi  vs.  Vietnam JSCmmercial Bank

Petrolimex International

Risk-Adjusted Performance

3 of 100

Insignificant

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

Vietnam JSCmmercial Bank

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam JSCmmercial Bank are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Vietnam JSCmmercial may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Petrolimex International and Vietnam JSCmmercial

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

The idea behind Petrolimex International Trading and Vietnam JSCmmercial Bank 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.