Correlation Between Vietnam Petroleum and Bentre Aquaproduct

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

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

Diversification Opportunities for Vietnam Petroleum and Bentre Aquaproduct

0.71

Correlation Coefficient

Vietnam Petroleum  Bentre Aquaproduct

Poor diversification

The 3 months correlation between Vietnam and Bentre is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and Bentre Aquaproduct Import in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bentre Aquaproduct Import and Vietnam Petroleum 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 Vietnam Petroleum Transport are associated (or correlated) with Bentre Aquaproduct. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bentre Aquaproduct Import has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and Bentre Aquaproduct go up and down completely randomly.

Pair Corralation between Vietnam Petroleum and Bentre Aquaproduct

Assuming the 90 days trading horizon Vietnam Petroleum is expected to generate 6.3 times less return on investment than Bentre Aquaproduct. But when comparing it to its historical volatility, Vietnam Petroleum Transport is 1.32 times less risky than Bentre Aquaproduct. It trades about 0.04 of its potential returns per unit of risk. Bentre Aquaproduct Import is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  3,657,261  in Bentre Aquaproduct Import on December 27, 2024 and sell it today you would earn a total of  932,739  from holding Bentre Aquaproduct Import or generate 25.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Vietnam Petroleum Transport  vs.  Bentre Aquaproduct Import

Vietnam Petroleum

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Petroleum Transport are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Vietnam Petroleum is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Bentre Aquaproduct Import

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Bentre Aquaproduct Import are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Bentre Aquaproduct displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vietnam Petroleum and Bentre Aquaproduct

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

The idea behind Vietnam Petroleum Transport and Bentre Aquaproduct Import 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.