Correlation Between Pacific Petroleum and Truong Thanh

Can any of the company-specific risk be diversified away by investing in both Pacific Petroleum and Truong Thanh 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 Pacific Petroleum and Truong Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Pacific Petroleum Transportation and Truong Thanh Furniture, you can compare the effects of market volatilities on Pacific Petroleum and Truong Thanh 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 Pacific Petroleum with a short position of Truong Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pacific Petroleum and Truong Thanh.

Diversification Opportunities for Pacific Petroleum and Truong Thanh

0.48

Correlation Coefficient

Pacific Petroleum  Truong Thanh

Very weak diversification

The 3 months correlation between Pacific and Truong is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Petroleum Transportati and Truong Thanh Furniture in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Truong Thanh Furniture and Pacific Petroleum 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 Pacific Petroleum Transportation are associated (or correlated) with Truong Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Truong Thanh Furniture has no effect on the direction of Pacific Petroleum i.e., Pacific Petroleum and Truong Thanh go up and down completely randomly.

Pair Corralation between Pacific Petroleum and Truong Thanh

Assuming the 90 days trading horizon Pacific Petroleum Transportation is expected to generate 0.83 times more return on investment than Truong Thanh. However, Pacific Petroleum Transportation is 1.2 times less risky than Truong Thanh. It trades about 0.34 of its potential returns per unit of risk. Truong Thanh Furniture is currently generating about 0.09 per unit of risk. If you would invest  1,635,000  in Pacific Petroleum Transportation on October 9, 2024 and sell it today you would earn a total of  175,000  from holding Pacific Petroleum Transportation or generate 10.7% return on investment over 90 days.

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

Pacific Petroleum Transportati  vs.  Truong Thanh Furniture

Pacific Petroleum

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pacific Petroleum Transportation are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Pacific Petroleum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Truong Thanh Furniture

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Truong Thanh Furniture are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Truong Thanh is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Pacific Petroleum and Truong Thanh

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

The idea behind Pacific Petroleum Transportation and Truong Thanh Furniture 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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.