Correlation Between Petrovietnam Drilling and Sao Vang

Can any of the company-specific risk be diversified away by investing in both Petrovietnam Drilling and Sao Vang 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 Petrovietnam Drilling and Sao Vang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petrovietnam Drilling Mud and Sao Vang Rubber, you can compare the effects of market volatilities on Petrovietnam Drilling and Sao Vang 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 Petrovietnam Drilling with a short position of Sao Vang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrovietnam Drilling and Sao Vang.

Diversification Opportunities for Petrovietnam Drilling and Sao Vang

0.21

Correlation Coefficient

Petrovietnam Drilling  Sao Vang

Modest diversification

The 3 months correlation between Petrovietnam and Sao is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Drilling Mud and Sao Vang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sao Vang Rubber and Petrovietnam Drilling 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 Petrovietnam Drilling Mud are associated (or correlated) with Sao Vang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sao Vang Rubber has no effect on the direction of Petrovietnam Drilling i.e., Petrovietnam Drilling and Sao Vang go up and down completely randomly.

Pair Corralation between Petrovietnam Drilling and Sao Vang

Assuming the 90 days trading horizon Petrovietnam Drilling is expected to generate 2.11 times less return on investment than Sao Vang. But when comparing it to its historical volatility, Petrovietnam Drilling Mud is 2.51 times less risky than Sao Vang. It trades about 0.09 of its potential returns per unit of risk. Sao Vang Rubber is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  2,450,000  in Sao Vang Rubber on December 30, 2024 and sell it today you would earn a total of  195,000  from holding Sao Vang Rubber or generate 7.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	67.8%
Values	Daily Returns

Petrovietnam Drilling Mud  vs.  Sao Vang Rubber

Petrovietnam Drilling Mud

Risk-Adjusted Performance

Modest

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

Sao Vang Rubber

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sao Vang Rubber are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Sao Vang displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrovietnam Drilling and Sao Vang

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

The idea behind Petrovietnam Drilling Mud and Sao Vang Rubber 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.