Correlation Between PetroVietnam Transportation and Tri Viet

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

Diversification Opportunities for PetroVietnam Transportation and Tri Viet

0.08

Correlation Coefficient

PetroVietnam Transportation  Tri Viet

Significant diversification

The 3 months correlation between PetroVietnam and Tri is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and Tri Viet Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Viet Management 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 Tri Viet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Viet Management has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and Tri Viet go up and down completely randomly.

Pair Corralation between PetroVietnam Transportation and Tri Viet

Assuming the 90 days trading horizon PetroVietnam Transportation is expected to generate 2.44 times less return on investment than Tri Viet. But when comparing it to its historical volatility, PetroVietnam Transportation Corp is 1.57 times less risky than Tri Viet. It trades about 0.13 of its potential returns per unit of risk. Tri Viet Management is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest  1,000,000  in Tri Viet Management on September 21, 2024 and sell it today you would earn a total of  60,000  from holding Tri Viet Management or generate 6.0% return on investment over 90 days.

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

PetroVietnam Transportation Co  vs.  Tri Viet Management

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 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.

Tri Viet Management

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tri Viet Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Tri Viet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with PetroVietnam Transportation and Tri Viet

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

The idea behind PetroVietnam Transportation Corp and Tri Viet Management 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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.