Correlation Between Petrolimex Petrochemical and Binhthuan Agriculture

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

By analyzing existing cross correlation between Petrolimex Petrochemical JSC and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Petrolimex Petrochemical and Binhthuan Agriculture 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 Petrochemical with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex Petrochemical and Binhthuan Agriculture.

Diversification Opportunities for Petrolimex Petrochemical and Binhthuan Agriculture

0.46

Correlation Coefficient

Petrolimex Petrochemical  Binhthuan Agriculture

Very weak diversification

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

Pair Corralation between Petrolimex Petrochemical and Binhthuan Agriculture

Assuming the 90 days trading horizon Petrolimex Petrochemical JSC is expected to under-perform the Binhthuan Agriculture. But the stock apears to be less risky and, when comparing its historical volatility, Petrolimex Petrochemical JSC is 1.21 times less risky than Binhthuan Agriculture. The stock trades about -0.12 of its potential returns per unit of risk. The Binhthuan Agriculture Services is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  424,000  in Binhthuan Agriculture Services on September 17, 2024 and sell it today you would earn a total of  46,000  from holding Binhthuan Agriculture Services or generate 10.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Petrolimex Petrochemical JSC  vs.  Binhthuan Agriculture Services

Petrolimex Petrochemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrolimex Petrochemical JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Binhthuan Agriculture

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with Petrolimex Petrochemical and Binhthuan Agriculture

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

The idea behind Petrolimex Petrochemical JSC and Binhthuan Agriculture Services 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.