Correlation Between PetroVietnam Drilling and Saigon Telecommunicatio

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

Diversification Opportunities for PetroVietnam Drilling and Saigon Telecommunicatio

-0.01

Correlation Coefficient

PetroVietnam Drilling  Saigon Telecommunicatio

Good diversification

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

Pair Corralation between PetroVietnam Drilling and Saigon Telecommunicatio

Assuming the 90 days trading horizon PetroVietnam Drilling is expected to generate 8.96 times less return on investment than Saigon Telecommunicatio. But when comparing it to its historical volatility, PetroVietnam Drilling Well is 1.46 times less risky than Saigon Telecommunicatio. It trades about 0.05 of its potential returns per unit of risk. Saigon Telecommunication Technologies is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest  1,465,000  in Saigon Telecommunication Technologies on September 22, 2024 and sell it today you would earn a total of  195,000  from holding Saigon Telecommunication Technologies or generate 13.31% 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.  Saigon Telecommunication Techn

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.

Saigon Telecommunicatio

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Saigon Telecommunication Technologies are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Saigon Telecommunicatio displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PetroVietnam Drilling and Saigon Telecommunicatio

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

The idea behind PetroVietnam Drilling Well and Saigon Telecommunication Technologies 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.