Correlation Between Vincom Retail and PetroVietnam Drilling

Can any of the company-specific risk be diversified away by investing in both Vincom Retail and PetroVietnam Drilling 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 Vincom Retail and PetroVietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vincom Retail JSC and PetroVietnam Drilling Well, you can compare the effects of market volatilities on Vincom Retail and PetroVietnam Drilling 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 Vincom Retail with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vincom Retail and PetroVietnam Drilling.

Diversification Opportunities for Vincom Retail and PetroVietnam Drilling

0.07

Correlation Coefficient

Vincom Retail  PetroVietnam Drilling

Significant diversification

The 3 months correlation between Vincom and PetroVietnam is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding Vincom Retail JSC and PetroVietnam Drilling Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Drilling and Vincom Retail 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 Vincom Retail JSC are associated (or correlated) with PetroVietnam Drilling. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroVietnam Drilling has no effect on the direction of Vincom Retail i.e., Vincom Retail and PetroVietnam Drilling go up and down completely randomly.

Pair Corralation between Vincom Retail and PetroVietnam Drilling

Assuming the 90 days trading horizon Vincom Retail JSC is expected to generate 1.01 times more return on investment than PetroVietnam Drilling. However, Vincom Retail is 1.01 times more volatile than PetroVietnam Drilling Well. It trades about 0.14 of its potential returns per unit of risk. PetroVietnam Drilling Well is currently generating about -0.06 per unit of risk. If you would invest  1,730,000  in Vincom Retail JSC on December 25, 2024 and sell it today you would earn a total of  185,000  from holding Vincom Retail JSC or generate 10.69% return on investment over 90 days.

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

Vincom Retail JSC  vs.  PetroVietnam Drilling Well

Vincom Retail JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vincom Retail JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Vincom Retail may actually be approaching a critical reversion point that can send shares even higher in April 2025.

PetroVietnam Drilling

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Vincom Retail and PetroVietnam Drilling

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

The idea behind Vincom Retail JSC and PetroVietnam Drilling Well 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 Transaction History module to view history of all your transactions and understand their impact on performance.