Correlation Between Petrolimex Petrochemical and VietinBank Securities

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

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

Diversification Opportunities for Petrolimex Petrochemical and VietinBank Securities

0.86

Correlation Coefficient

Petrolimex Petrochemical  VietinBank Securities

Very poor diversification

The 3 months correlation between Petrolimex and VietinBank is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex Petrochemical JSC 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 Petrolimex Petrochemical 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 Petrolimex Petrochemical JSC 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 Petrolimex Petrochemical i.e., Petrolimex Petrochemical and VietinBank Securities go up and down completely randomly.

Pair Corralation between Petrolimex Petrochemical and VietinBank Securities

Assuming the 90 days trading horizon Petrolimex Petrochemical JSC is expected to under-perform the VietinBank Securities. In addition to that, Petrolimex Petrochemical is 1.01 times more volatile than VietinBank Securities JSC. It trades about -0.09 of its total potential returns per unit of risk. VietinBank Securities JSC is currently generating about -0.04 per unit of volatility. If you would invest  3,805,000  in VietinBank Securities JSC on September 15, 2024 and sell it today you would lose (205,000) from holding VietinBank Securities JSC or give up 5.39% of portfolio value over 90 days.

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

Petrolimex Petrochemical JSC  vs.  VietinBank Securities JSC

Petrolimex Petrochemical

Risk-Adjusted Performance

0 of 100

Very Weak

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

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 very healthy basic indicators, VietinBank Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Petrolimex Petrochemical and VietinBank Securities

The main advantage of trading using opposite Petrolimex Petrochemical and VietinBank Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex Petrochemical 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 Petrolimex Petrochemical JSC 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.