Correlation Between PetroVietnam Transportation and POST TELECOMMU

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

Diversification Opportunities for PetroVietnam Transportation and POST TELECOMMU

-0.18

Correlation Coefficient

PetroVietnam Transportation  POST TELECOMMU

Good diversification

The 3 months correlation between PetroVietnam and POST is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and POST TELECOMMU in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on POST TELECOMMU 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 POST TELECOMMU. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of POST TELECOMMU has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and POST TELECOMMU go up and down completely randomly.

Pair Corralation between PetroVietnam Transportation and POST TELECOMMU

Assuming the 90 days trading horizon PetroVietnam Transportation Corp is expected to under-perform the POST TELECOMMU. But the stock apears to be less risky and, when comparing its historical volatility, PetroVietnam Transportation Corp is 2.14 times less risky than POST TELECOMMU. The stock trades about -0.04 of its potential returns per unit of risk. The POST TELECOMMU is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  3,210,000  in POST TELECOMMU on October 9, 2024 and sell it today you would earn a total of  390,000  from holding POST TELECOMMU or generate 12.15% return on investment over 90 days.

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

PetroVietnam Transportation Co  vs.  POST TELECOMMU

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.

POST TELECOMMU

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in POST TELECOMMU are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, POST TELECOMMU displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PetroVietnam Transportation and POST TELECOMMU

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

The idea behind PetroVietnam Transportation Corp and POST TELECOMMU 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.