Correlation Between PetroVietnam Drilling and Century Synthetic

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

Diversification Opportunities for PetroVietnam Drilling and Century Synthetic

0.87

Correlation Coefficient

PetroVietnam Drilling  Century Synthetic

Very poor diversification

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

Pair Corralation between PetroVietnam Drilling and Century Synthetic

Assuming the 90 days trading horizon PetroVietnam Drilling is expected to generate 1.49 times less return on investment than Century Synthetic. In addition to that, PetroVietnam Drilling is 2.03 times more volatile than Century Synthetic Fiber. It trades about 0.01 of its total potential returns per unit of risk. Century Synthetic Fiber is currently generating about 0.02 per unit of volatility. If you would invest  2,455,000  in Century Synthetic Fiber on September 24, 2024 and sell it today you would earn a total of  5,000  from holding Century Synthetic Fiber or generate 0.2% 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.  Century Synthetic Fiber

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.

Century Synthetic Fiber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Century Synthetic Fiber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's forward-looking signals 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 Century Synthetic

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

The idea behind PetroVietnam Drilling Well and Century Synthetic Fiber 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 Transaction History module to view history of all your transactions and understand their impact on performance.