Correlation Between SMC Investment and Vietnam Petroleum

Can any of the company-specific risk be diversified away by investing in both SMC Investment and Vietnam Petroleum 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 SMC Investment and Vietnam Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SMC Investment Trading and Vietnam Petroleum Transport, you can compare the effects of market volatilities on SMC Investment and Vietnam Petroleum 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 SMC Investment with a short position of Vietnam Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of SMC Investment and Vietnam Petroleum.

Diversification Opportunities for SMC Investment and Vietnam Petroleum

-0.07

Correlation Coefficient

SMC Investment  Vietnam Petroleum

Good diversification

The 3 months correlation between SMC and Vietnam is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding SMC Investment Trading and Vietnam Petroleum Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Petroleum and SMC Investment 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 SMC Investment Trading are associated (or correlated) with Vietnam Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Petroleum has no effect on the direction of SMC Investment i.e., SMC Investment and Vietnam Petroleum go up and down completely randomly.

Pair Corralation between SMC Investment and Vietnam Petroleum

Assuming the 90 days trading horizon SMC Investment is expected to generate 26.01 times less return on investment than Vietnam Petroleum. In addition to that, SMC Investment is 1.81 times more volatile than Vietnam Petroleum Transport. It trades about 0.0 of its total potential returns per unit of risk. Vietnam Petroleum Transport is currently generating about 0.12 per unit of volatility. If you would invest  1,300,000  in Vietnam Petroleum Transport on September 25, 2024 and sell it today you would earn a total of  180,000  from holding Vietnam Petroleum Transport or generate 13.85% return on investment over 90 days.

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

SMC Investment Trading  vs.  Vietnam Petroleum Transport

SMC Investment Trading

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vietnam Petroleum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Petroleum Transport are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Petroleum displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SMC Investment and Vietnam Petroleum

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

The idea behind SMC Investment Trading and Vietnam Petroleum Transport 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.