Correlation Between Materials Petroleum and Thong Nhat

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

By analyzing existing cross correlation between Materials Petroleum JSC and Thong Nhat JSC, you can compare the effects of market volatilities on Materials Petroleum and Thong Nhat 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 Materials Petroleum with a short position of Thong Nhat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Materials Petroleum and Thong Nhat.

Diversification Opportunities for Materials Petroleum and Thong Nhat

-0.11

Correlation Coefficient

Materials Petroleum  Thong Nhat

Good diversification

The 3 months correlation between Materials and Thong is -0.11. Overlapping area represents the amount of risk that can be diversified away by holding Materials Petroleum JSC and Thong Nhat JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thong Nhat JSC and Materials 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 Materials Petroleum JSC are associated (or correlated) with Thong Nhat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thong Nhat JSC has no effect on the direction of Materials Petroleum i.e., Materials Petroleum and Thong Nhat go up and down completely randomly.

Pair Corralation between Materials Petroleum and Thong Nhat

Assuming the 90 days trading horizon Materials Petroleum is expected to generate 2.11 times less return on investment than Thong Nhat. In addition to that, Materials Petroleum is 1.03 times more volatile than Thong Nhat JSC. It trades about 0.09 of its total potential returns per unit of risk. Thong Nhat JSC is currently generating about 0.21 per unit of volatility. If you would invest  3,704,320  in Thong Nhat JSC on September 29, 2024 and sell it today you would earn a total of  395,680  from holding Thong Nhat JSC or generate 10.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	61.9%
Values	Daily Returns

Materials Petroleum JSC  vs.  Thong Nhat JSC

Materials Petroleum JSC

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Materials Petroleum JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Materials Petroleum may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thong Nhat JSC

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thong Nhat JSC are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Thong Nhat displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Materials Petroleum and Thong Nhat

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

The idea behind Materials Petroleum JSC and Thong Nhat 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.