Correlation Between PetroVietnam Drilling and Ha Noi

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

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

Diversification Opportunities for PetroVietnam Drilling and Ha Noi

0.77

Correlation Coefficient

PetroVietnam Drilling  Ha Noi

Poor diversification

The 3 months correlation between PetroVietnam and EID is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Drilling Well and Ha Noi Education in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ha Noi Education and PetroVietnam Drilling 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 PetroVietnam Drilling Well are associated (or correlated) with Ha Noi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ha Noi Education has no effect on the direction of PetroVietnam Drilling i.e., PetroVietnam Drilling and Ha Noi go up and down completely randomly.

Pair Corralation between PetroVietnam Drilling and Ha Noi

Assuming the 90 days trading horizon PetroVietnam Drilling Well is expected to under-perform the Ha Noi. In addition to that, PetroVietnam Drilling is 1.89 times more volatile than Ha Noi Education. It trades about -0.16 of its total potential returns per unit of risk. Ha Noi Education is currently generating about -0.11 per unit of volatility. If you would invest  2,750,000  in Ha Noi Education on September 29, 2024 and sell it today you would lose (120,000) from holding Ha Noi Education or give up 4.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	92.31%
Values	Daily Returns

PetroVietnam Drilling Well  vs.  Ha Noi Education

PetroVietnam Drilling

Risk-Adjusted Performance

0 of 100

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 unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Ha Noi Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with PetroVietnam Drilling and Ha Noi

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

The idea behind PetroVietnam Drilling Well and Ha Noi Education 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.