Correlation Between Petrovietnam Technical and Construction JSC

Can any of the company-specific risk be diversified away by investing in both Petrovietnam Technical and Construction JSC 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 Construction JSC 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 Construction JSC No5, you can compare the effects of market volatilities on Petrovietnam Technical and Construction JSC 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 Construction JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrovietnam Technical and Construction JSC.

Diversification Opportunities for Petrovietnam Technical and Construction JSC

-0.69

Correlation Coefficient

Petrovietnam Technical  Construction JSC

Excellent diversification

The 3 months correlation between Petrovietnam and Construction is -0.69. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Technical Service and Construction JSC No5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction JSC No5 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 Construction JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction JSC No5 has no effect on the direction of Petrovietnam Technical i.e., Petrovietnam Technical and Construction JSC go up and down completely randomly.

Pair Corralation between Petrovietnam Technical and Construction JSC

Assuming the 90 days trading horizon Petrovietnam Technical Services is expected to under-perform the Construction JSC. But the stock apears to be less risky and, when comparing its historical volatility, Petrovietnam Technical Services is 3.68 times less risky than Construction JSC. The stock trades about -0.21 of its potential returns per unit of risk. The Construction JSC No5 is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,800,000  in Construction JSC No5 on October 10, 2024 and sell it today you would earn a total of  400,000  from holding Construction JSC No5 or generate 22.22% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	58.73%
Values	Daily Returns

Petrovietnam Technical Service  vs.  Construction JSC No5

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.

Construction JSC No5

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Construction JSC No5 are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction JSC displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrovietnam Technical and Construction JSC

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

The idea behind Petrovietnam Technical Services and Construction JSC No5 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.