Correlation Between PetroVietnam Drilling and An Phat

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

By analyzing existing cross correlation between PetroVietnam Drilling Well and An Phat Plastic, you can compare the effects of market volatilities on PetroVietnam Drilling and An Phat 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 An Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Drilling and An Phat.

Diversification Opportunities for PetroVietnam Drilling and An Phat

0.87

Correlation Coefficient

PetroVietnam Drilling  An Phat

Very poor diversification

The 3 months correlation between PetroVietnam and AAA is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Drilling Well and An Phat Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Phat Plastic 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 Well are associated (or correlated) with An Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Phat Plastic has no effect on the direction of PetroVietnam Drilling i.e., PetroVietnam Drilling and An Phat go up and down completely randomly.

Pair Corralation between PetroVietnam Drilling and An Phat

Assuming the 90 days trading horizon PetroVietnam Drilling Well is expected to under-perform the An Phat. In addition to that, PetroVietnam Drilling is 1.35 times more volatile than An Phat Plastic. It trades about -0.04 of its total potential returns per unit of risk. An Phat Plastic is currently generating about 0.16 per unit of volatility. If you would invest  857,000  in An Phat Plastic on September 26, 2024 and sell it today you would earn a total of  28,000  from holding An Phat Plastic or generate 3.27% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

PetroVietnam Drilling Well  vs.  An Phat Plastic

PetroVietnam Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroVietnam Drilling Well 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.

An Phat Plastic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days An Phat Plastic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with PetroVietnam Drilling and An Phat

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

The idea behind PetroVietnam Drilling Well and An Phat 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.