Correlation Between Transimex Transportation and PetroVietnam Transportation

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

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

Diversification Opportunities for Transimex Transportation and PetroVietnam Transportation

0.6

Correlation Coefficient

Transimex Transportation  PetroVietnam Transportation

Poor diversification

The 3 months correlation between Transimex and PetroVietnam is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Transimex Transportation JSC and PetroVietnam Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Transportation and Transimex 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 Transimex Transportation JSC are associated (or correlated) with PetroVietnam Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroVietnam Transportation has no effect on the direction of Transimex Transportation i.e., Transimex Transportation and PetroVietnam Transportation go up and down completely randomly.

Pair Corralation between Transimex Transportation and PetroVietnam Transportation

Assuming the 90 days trading horizon Transimex Transportation JSC is expected to under-perform the PetroVietnam Transportation. In addition to that, Transimex Transportation is 1.37 times more volatile than PetroVietnam Transportation Corp. It trades about -0.08 of its total potential returns per unit of risk. PetroVietnam Transportation Corp is currently generating about -0.02 per unit of volatility. If you would invest  2,825,000  in PetroVietnam Transportation Corp on October 6, 2024 and sell it today you would lose (50,000) from holding PetroVietnam Transportation Corp or give up 1.77% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	65.63%
Values	Daily Returns

Transimex Transportation JSC  vs.  PetroVietnam Transportation Co

Transimex Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Transimex Transportation JSC 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.

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.

Pair Trading with Transimex Transportation and PetroVietnam Transportation

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

The idea behind Transimex Transportation JSC and PetroVietnam Transportation Corp 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.