Correlation Between Vietnam Dairy and Petrolimex International

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

By analyzing existing cross correlation between Vietnam Dairy Products and Petrolimex International Trading, you can compare the effects of market volatilities on Vietnam Dairy and Petrolimex International 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 Dairy with a short position of Petrolimex International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Dairy and Petrolimex International.

Diversification Opportunities for Vietnam Dairy and Petrolimex International

-0.62

Correlation Coefficient

Vietnam Dairy  Petrolimex International

Excellent diversification

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

Pair Corralation between Vietnam Dairy and Petrolimex International

Assuming the 90 days trading horizon Vietnam Dairy Products is expected to under-perform the Petrolimex International. But the stock apears to be less risky and, when comparing its historical volatility, Vietnam Dairy Products is 2.48 times less risky than Petrolimex International. The stock trades about -0.35 of its potential returns per unit of risk. The Petrolimex International Trading is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest  547,000  in Petrolimex International Trading on October 25, 2024 and sell it today you would lose (12,000) from holding Petrolimex International Trading or give up 2.19% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.48%
Values	Daily Returns

Vietnam Dairy Products  vs.  Petrolimex International Tradi

Vietnam Dairy Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vietnam Dairy Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Petrolimex International

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Petrolimex International Trading are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Petrolimex International may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Vietnam Dairy and Petrolimex International

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

The idea behind Vietnam Dairy Products and Petrolimex International Trading 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.