Correlation Between Petro Vietnam and VTC Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both Petro Vietnam and VTC 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 Petro Vietnam and VTC Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petro Vietnam LPG and VTC Telecommunications JSC, you can compare the effects of market volatilities on Petro Vietnam and VTC 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 Petro Vietnam with a short position of VTC Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petro Vietnam and VTC Telecommunicatio.
Diversification Opportunities for Petro Vietnam and VTC Telecommunicatio
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Petro and VTC is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Petro Vietnam LPG and VTC Telecommunications JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTC Telecommunications and Petro Vietnam 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 Petro Vietnam LPG are associated (or correlated) with VTC Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTC Telecommunications has no effect on the direction of Petro Vietnam i.e., Petro Vietnam and VTC Telecommunicatio go up and down completely randomly.
Pair Corralation between Petro Vietnam and VTC Telecommunicatio
Assuming the 90 days trading horizon Petro Vietnam LPG is expected to generate 0.95 times more return on investment than VTC Telecommunicatio. However, Petro Vietnam LPG is 1.05 times less risky than VTC Telecommunicatio. It trades about 0.11 of its potential returns per unit of risk. VTC Telecommunications JSC is currently generating about 0.05 per unit of risk. If you would invest 670,000 in Petro Vietnam LPG on December 2, 2024 and sell it today you would earn a total of 100,000 from holding Petro Vietnam LPG or generate 14.93% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 93.22% |
Values | Daily Returns |
Petro Vietnam LPG vs. VTC Telecommunications JSC
Performance |
Timeline |
Petro Vietnam LPG |
VTC Telecommunications |
Petro Vietnam and VTC Telecommunicatio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Petro Vietnam and VTC Telecommunicatio
The main advantage of trading using opposite Petro Vietnam and VTC Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petro Vietnam position performs unexpectedly, VTC 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 VTC Telecommunicatio will offset losses from the drop in VTC Telecommunicatio's long position.Petro Vietnam vs. PetroVietnam Transportation Corp | Petro Vietnam vs. Ha Noi Education | Petro Vietnam vs. Tienlen Steel Corp | Petro Vietnam vs. Hochiminh City Metal |
VTC Telecommunicatio vs. An Phat Plastic | VTC Telecommunicatio vs. Taseco Air Services | VTC Telecommunicatio vs. Ben Thanh Rubber | VTC Telecommunicatio vs. Southern Rubber Industry |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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