Correlation Between Petrovietnam Technical and TDT Investment

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

Diversification Opportunities for Petrovietnam Technical and TDT Investment

-0.53

Correlation Coefficient

Petrovietnam Technical  TDT Investment

Excellent diversification

The 3 months correlation between Petrovietnam and TDT is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Technical Service and TDT Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on TDT Investment 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 TDT Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of TDT Investment has no effect on the direction of Petrovietnam Technical i.e., Petrovietnam Technical and TDT Investment go up and down completely randomly.

Pair Corralation between Petrovietnam Technical and TDT Investment

Assuming the 90 days trading horizon Petrovietnam Technical Services is expected to under-perform the TDT Investment. In addition to that, Petrovietnam Technical is 1.93 times more volatile than TDT Investment and. It trades about -0.06 of its total potential returns per unit of risk. TDT Investment and is currently generating about -0.09 per unit of volatility. If you would invest  730,000  in TDT Investment and on October 26, 2024 and sell it today you would lose (10,000) from holding TDT Investment and or give up 1.37% of portfolio value over 90 days.

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

Petrovietnam Technical Service  vs.  TDT Investment and

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 latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

TDT Investment

Risk-Adjusted Performance

13 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in TDT Investment and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TDT Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Petrovietnam Technical and TDT Investment

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

The idea behind Petrovietnam Technical Services and TDT Investment and 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.