Correlation Between Petrovietnam Technical and Viet Nam

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

Diversification Opportunities for Petrovietnam Technical and Viet Nam

-0.19

Correlation Coefficient

Petrovietnam Technical  Viet Nam

Good diversification

The 3 months correlation between Petrovietnam and Viet is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Technical Service and Viet Nam Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viet Nam Construction 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 Viet Nam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viet Nam Construction has no effect on the direction of Petrovietnam Technical i.e., Petrovietnam Technical and Viet Nam go up and down completely randomly.

Pair Corralation between Petrovietnam Technical and Viet Nam

Assuming the 90 days trading horizon Petrovietnam Technical Services is expected to generate 0.54 times more return on investment than Viet Nam. However, Petrovietnam Technical Services is 1.84 times less risky than Viet Nam. It trades about -0.13 of its potential returns per unit of risk. Viet Nam Construction is currently generating about -0.08 per unit of risk. If you would invest  3,719,629  in Petrovietnam Technical Services on October 26, 2024 and sell it today you would lose (399,629) from holding Petrovietnam Technical Services or give up 10.74% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	47.62%
Values	Daily Returns

Petrovietnam Technical Service  vs.  Viet Nam Construction

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.

Viet Nam Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viet Nam Construction 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.

Pair Trading with Petrovietnam Technical and Viet Nam

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

The idea behind Petrovietnam Technical Services and Viet Nam Construction 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.

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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.