Correlation Between Tri Viet and Petrovietnam Technical

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

By analyzing existing cross correlation between Tri Viet Management and Petrovietnam Technical Services, you can compare the effects of market volatilities on Tri Viet and Petrovietnam Technical 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 Tri Viet with a short position of Petrovietnam Technical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Viet and Petrovietnam Technical.

Diversification Opportunities for Tri Viet and Petrovietnam Technical

0.25

Correlation Coefficient

Tri Viet  Petrovietnam Technical

Modest diversification

The 3 months correlation between Tri and Petrovietnam is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Tri Viet Management and Petrovietnam Technical Service in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrovietnam Technical and Tri Viet 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 Tri Viet Management are associated (or correlated) with Petrovietnam Technical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrovietnam Technical has no effect on the direction of Tri Viet i.e., Tri Viet and Petrovietnam Technical go up and down completely randomly.

Pair Corralation between Tri Viet and Petrovietnam Technical

Assuming the 90 days trading horizon Tri Viet Management is expected to generate 1.91 times more return on investment than Petrovietnam Technical. However, Tri Viet is 1.91 times more volatile than Petrovietnam Technical Services. It trades about -0.02 of its potential returns per unit of risk. Petrovietnam Technical Services is currently generating about -0.19 per unit of risk. If you would invest  990,000  in Tri Viet Management on October 22, 2024 and sell it today you would lose (40,000) from holding Tri Viet Management or give up 4.04% of portfolio value over 90 days.

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

Tri Viet Management  vs.  Petrovietnam Technical Service

Tri Viet Management

Risk-Adjusted Performance

0 of 100

Very Weak

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

Petrovietnam Technical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrovietnam Technical Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Tri Viet and Petrovietnam Technical

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

The idea behind Tri Viet Management and Petrovietnam Technical Services 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.