Correlation Between PetroVietnam Drilling and Hochiminh City

Can any of the company-specific risk be diversified away by investing in both PetroVietnam Drilling and Hochiminh City 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 Hochiminh City 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 Hochiminh City Metal, you can compare the effects of market volatilities on PetroVietnam Drilling and Hochiminh City 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 Hochiminh City. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Drilling and Hochiminh City.

Diversification Opportunities for PetroVietnam Drilling and Hochiminh City

-0.01

Correlation Coefficient

PetroVietnam Drilling  Hochiminh City

Good diversification

The 3 months correlation between PetroVietnam and Hochiminh is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Drilling Well and Hochiminh City Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochiminh City Metal 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 Hochiminh City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochiminh City Metal has no effect on the direction of PetroVietnam Drilling i.e., PetroVietnam Drilling and Hochiminh City go up and down completely randomly.

Pair Corralation between PetroVietnam Drilling and Hochiminh City

Assuming the 90 days trading horizon PetroVietnam Drilling Well is expected to under-perform the Hochiminh City. In addition to that, PetroVietnam Drilling is 1.54 times more volatile than Hochiminh City Metal. It trades about -0.11 of its total potential returns per unit of risk. Hochiminh City Metal is currently generating about 0.11 per unit of volatility. If you would invest  1,060,000  in Hochiminh City Metal on September 15, 2024 and sell it today you would earn a total of  80,000  from holding Hochiminh City Metal or generate 7.55% return on investment over 90 days.

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

PetroVietnam Drilling Well  vs.  Hochiminh City Metal

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 latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Hochiminh City Metal

Risk-Adjusted Performance

9 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Hochiminh City Metal are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Hochiminh City may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PetroVietnam Drilling and Hochiminh City

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

The idea behind PetroVietnam Drilling Well and Hochiminh City Metal 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.