Correlation Between PV2 Investment and Viet Thanh

Can any of the company-specific risk be diversified away by investing in both PV2 Investment and Viet Thanh 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 PV2 Investment and Viet Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PV2 Investment JSC and Viet Thanh Plastic, you can compare the effects of market volatilities on PV2 Investment and Viet Thanh 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 PV2 Investment with a short position of Viet Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of PV2 Investment and Viet Thanh.

Diversification Opportunities for PV2 Investment and Viet Thanh

-0.11

Correlation Coefficient

PV2 Investment  Viet Thanh

Good diversification

The 3 months correlation between PV2 and Viet is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding PV2 Investment JSC and Viet Thanh Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viet Thanh Plastic and PV2 Investment 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 PV2 Investment JSC are associated (or correlated) with Viet Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viet Thanh Plastic has no effect on the direction of PV2 Investment i.e., PV2 Investment and Viet Thanh go up and down completely randomly.

Pair Corralation between PV2 Investment and Viet Thanh

Assuming the 90 days trading horizon PV2 Investment is expected to generate 2.35 times less return on investment than Viet Thanh. In addition to that, PV2 Investment is 1.17 times more volatile than Viet Thanh Plastic. It trades about 0.03 of its total potential returns per unit of risk. Viet Thanh Plastic is currently generating about 0.07 per unit of volatility. If you would invest  760,000  in Viet Thanh Plastic on October 3, 2024 and sell it today you would earn a total of  980,000  from holding Viet Thanh Plastic or generate 128.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.19%
Values	Daily Returns

PV2 Investment JSC  vs.  Viet Thanh Plastic

PV2 Investment JSC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in PV2 Investment JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, PV2 Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Viet Thanh Plastic

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Viet Thanh Plastic are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Viet Thanh is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with PV2 Investment and Viet Thanh

The main advantage of trading using opposite PV2 Investment and Viet Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PV2 Investment position performs unexpectedly, Viet Thanh 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 Viet Thanh will offset losses from the drop in Viet Thanh's long position.

The idea behind PV2 Investment JSC and Viet Thanh 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.