Correlation Between PetroVietnam Transportation and Pha Le

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

Diversification Opportunities for PetroVietnam Transportation and Pha Le

0.29

Correlation Coefficient

PetroVietnam Transportation  Pha Le

Modest diversification

The 3 months correlation between PetroVietnam and Pha is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and Pha Le Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Le Plastics 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 Pha Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Le Plastics has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and Pha Le go up and down completely randomly.

Pair Corralation between PetroVietnam Transportation and Pha Le

Assuming the 90 days trading horizon PetroVietnam Transportation Corp is expected to under-perform the Pha Le. But the stock apears to be less risky and, when comparing its historical volatility, PetroVietnam Transportation Corp is 1.94 times less risky than Pha Le. The stock trades about -0.11 of its potential returns per unit of risk. The Pha Le Plastics is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest  457,000  in Pha Le Plastics on October 9, 2024 and sell it today you would earn a total of  43,000  from holding Pha Le Plastics or generate 9.41% 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.  Pha Le Plastics

PetroVietnam Transportation

Risk-Adjusted Performance

0 of 100

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 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.

Pha Le Plastics

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Pha Le Plastics are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Pha Le 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 Pha Le

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

The idea behind PetroVietnam Transportation Corp and Pha Le Plastics 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.