Correlation Between Vietnam Petroleum and VietinBank Securities

Can any of the company-specific risk be diversified away by investing in both Vietnam Petroleum and VietinBank Securities 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 VietinBank Securities 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 VietinBank Securities JSC, you can compare the effects of market volatilities on Vietnam Petroleum and VietinBank Securities 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 VietinBank Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Petroleum and VietinBank Securities.

Diversification Opportunities for Vietnam Petroleum and VietinBank Securities

-0.62

Correlation Coefficient

Vietnam Petroleum  VietinBank Securities

Excellent diversification

The 3 months correlation between Vietnam and VietinBank is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and VietinBank Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VietinBank Securities JSC 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 VietinBank Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VietinBank Securities JSC has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and VietinBank Securities go up and down completely randomly.

Pair Corralation between Vietnam Petroleum and VietinBank Securities

Assuming the 90 days trading horizon Vietnam Petroleum Transport is expected to generate 1.19 times more return on investment than VietinBank Securities. However, Vietnam Petroleum is 1.19 times more volatile than VietinBank Securities JSC. It trades about 0.12 of its potential returns per unit of risk. VietinBank Securities JSC is currently generating about -0.12 per unit of risk. If you would invest  1,275,000  in Vietnam Petroleum Transport on October 7, 2024 and sell it today you would earn a total of  135,000  from holding Vietnam Petroleum Transport or generate 10.59% return on investment over 90 days.

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

Vietnam Petroleum Transport  vs.  VietinBank Securities JSC

Vietnam Petroleum

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Petroleum Transport are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Petroleum may actually be approaching a critical reversion point that can send shares even higher in February 2025.

VietinBank Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VietinBank Securities JSC 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 Vietnam Petroleum and VietinBank Securities

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

The idea behind Vietnam Petroleum Transport and VietinBank Securities JSC 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..