Correlation Between Petrovietnam Technical and DIC Holdings

Can any of the company-specific risk be diversified away by investing in both Petrovietnam Technical and DIC Holdings 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 Technical and DIC Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Petrovietnam Technical Services and DIC Holdings Construction, you can compare the effects of market volatilities on Petrovietnam Technical and DIC Holdings 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 Technical with a short position of DIC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrovietnam Technical and DIC Holdings.

Diversification Opportunities for Petrovietnam Technical and DIC Holdings

-0.85

Correlation Coefficient

Petrovietnam Technical  DIC Holdings

Pay attention - limited upside

The 3 months correlation between Petrovietnam and DIC is -0.85. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Technical Service and DIC Holdings Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIC Holdings Construction and Petrovietnam Technical 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 Technical Services are associated (or correlated) with DIC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIC Holdings Construction has no effect on the direction of Petrovietnam Technical i.e., Petrovietnam Technical and DIC Holdings go up and down completely randomly.

Pair Corralation between Petrovietnam Technical and DIC Holdings

Assuming the 90 days trading horizon Petrovietnam Technical is expected to generate 12.21 times less return on investment than DIC Holdings. But when comparing it to its historical volatility, Petrovietnam Technical Services is 3.44 times less risky than DIC Holdings. It trades about 0.02 of its potential returns per unit of risk. DIC Holdings Construction is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  1,280,000  in DIC Holdings Construction on September 17, 2024 and sell it today you would earn a total of  50,000  from holding DIC Holdings Construction or generate 3.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Petrovietnam Technical Service  vs.  DIC Holdings Construction

Petrovietnam Technical

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Petrovietnam Technical Services 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 basic 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.

DIC Holdings Construction

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in DIC Holdings Construction are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, DIC Holdings displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Petrovietnam Technical and DIC Holdings

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

The idea behind Petrovietnam Technical Services and DIC Holdings Construction 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.