Correlation Between Petrovietnam Technical and Petrolimex Petrochemical

Can any of the company-specific risk be diversified away by investing in both Petrovietnam Technical and Petrolimex Petrochemical 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 Technical and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petrovietnam Technical Services and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Petrovietnam Technical and Petrolimex Petrochemical 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 Technical with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrovietnam Technical and Petrolimex Petrochemical.

Diversification Opportunities for Petrovietnam Technical and Petrolimex Petrochemical

0.75

Correlation Coefficient

Petrovietnam Technical  Petrolimex Petrochemical

Poor diversification

The 3 months correlation between Petrovietnam and Petrolimex is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Technical Service and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Petrovietnam Technical 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 Technical Services are associated (or correlated) with Petrolimex Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Petrochemical has no effect on the direction of Petrovietnam Technical i.e., Petrovietnam Technical and Petrolimex Petrochemical go up and down completely randomly.

Pair Corralation between Petrovietnam Technical and Petrolimex Petrochemical

Assuming the 90 days trading horizon Petrovietnam Technical Services is expected to generate 0.86 times more return on investment than Petrolimex Petrochemical. However, Petrovietnam Technical Services is 1.17 times less risky than Petrolimex Petrochemical. It trades about 0.05 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.0 per unit of risk. If you would invest  2,254,023  in Petrovietnam Technical Services on October 4, 2024 and sell it today you would earn a total of  1,135,977  from holding Petrovietnam Technical Services or generate 50.4% return on investment over 90 days.

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

Petrovietnam Technical Service  vs.  Petrolimex Petrochemical JSC

Petrovietnam Technical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrovietnam Technical Services 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 basic 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.

Petrolimex Petrochemical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrolimex Petrochemical JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Petrolimex Petrochemical is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Petrovietnam Technical and Petrolimex Petrochemical

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

The idea behind Petrovietnam Technical Services and Petrolimex Petrochemical JSC 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.