Correlation Between Vietnam Petroleum and Educational Book

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

Diversification Opportunities for Vietnam Petroleum and Educational Book

0.31

Correlation Coefficient

Vietnam Petroleum  Educational Book

Weak diversification

The 3 months correlation between Vietnam and Educational is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and Educational Book In in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Educational Book 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 Educational Book. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Educational Book has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and Educational Book go up and down completely randomly.

Pair Corralation between Vietnam Petroleum and Educational Book

Assuming the 90 days trading horizon Vietnam Petroleum Transport is expected to under-perform the Educational Book. But the stock apears to be less risky and, when comparing its historical volatility, Vietnam Petroleum Transport is 2.25 times less risky than Educational Book. The stock trades about -0.02 of its potential returns per unit of risk. The Educational Book In is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  1,437,273  in Educational Book In on December 24, 2024 and sell it today you would lose (27,273) from holding Educational Book In or give up 1.9% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	45.76%
Values	Daily Returns

Vietnam Petroleum Transport  vs.  Educational Book In

Vietnam Petroleum

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vietnam Petroleum Transport has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Educational Book

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vietnam Petroleum and Educational Book

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

The idea behind Vietnam Petroleum Transport and Educational Book In 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.