Correlation Between PetroVietnam Transportation and An Phat

Can any of the company-specific risk be diversified away by investing in both PetroVietnam Transportation and An Phat 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 Transportation and An Phat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between PetroVietnam Transportation Corp and An Phat Plastic, you can compare the effects of market volatilities on PetroVietnam Transportation and An Phat 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 Transportation with a short position of An Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Transportation and An Phat.

Diversification Opportunities for PetroVietnam Transportation and An Phat

0.39

Correlation Coefficient

PetroVietnam Transportation  An Phat

Weak diversification

The 3 months correlation between PetroVietnam and AAA is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and An Phat Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Phat Plastic and PetroVietnam Transportation 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 Transportation Corp are associated (or correlated) with An Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Phat Plastic has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and An Phat go up and down completely randomly.

Pair Corralation between PetroVietnam Transportation and An Phat

Assuming the 90 days trading horizon PetroVietnam Transportation is expected to generate 1.4 times less return on investment than An Phat. But when comparing it to its historical volatility, PetroVietnam Transportation Corp is 1.47 times less risky than An Phat. It trades about 0.16 of its potential returns per unit of risk. An Phat Plastic is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  833,000  in An Phat Plastic on December 5, 2024 and sell it today you would earn a total of  41,000  from holding An Phat Plastic or generate 4.92% return on investment over 90 days.

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

PetroVietnam Transportation Co  vs.  An Phat Plastic

PetroVietnam Transportation

Risk-Adjusted Performance

Very Weak

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

An Phat Plastic

Risk-Adjusted Performance

Very Weak

Over the last 90 days An Phat Plastic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, An Phat 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 Transportation and An Phat

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

The idea behind PetroVietnam Transportation Corp and An Phat Plastic 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.