Correlation Between PetroVietnam Drilling and Saigon Viendong

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

Diversification Opportunities for PetroVietnam Drilling and Saigon Viendong

0.0

Correlation Coefficient

PetroVietnam Drilling  Saigon Viendong

Pay attention - limited upside

The 3 months correlation between PetroVietnam and Saigon is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Drilling Well and Saigon Viendong Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saigon Viendong Tech 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 Viendong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saigon Viendong Tech has no effect on the direction of PetroVietnam Drilling i.e., PetroVietnam Drilling and Saigon Viendong go up and down completely randomly.

Pair Corralation between PetroVietnam Drilling and Saigon Viendong

Assuming the 90 days trading horizon PetroVietnam Drilling Well is expected to under-perform the Saigon Viendong. But the stock apears to be less risky and, when comparing its historical volatility, PetroVietnam Drilling Well is 1.64 times less risky than Saigon Viendong. The stock trades about -0.12 of its potential returns per unit of risk. The Saigon Viendong Technology is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  1,140,000  in Saigon Viendong Technology on October 7, 2024 and sell it today you would earn a total of  50,000  from holding Saigon Viendong Technology or generate 4.39% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	93.02%
Values	Daily Returns

PetroVietnam Drilling Well  vs.  Saigon Viendong Technology

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 February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Saigon Viendong Tech

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Saigon Viendong Technology are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Saigon Viendong may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with PetroVietnam Drilling and Saigon Viendong

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

The idea behind PetroVietnam Drilling Well and Saigon Viendong Technology 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.