Correlation Between Petrovietnam Technical and Thanh Dat

Can any of the company-specific risk be diversified away by investing in both Petrovietnam Technical and Thanh Dat 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 Thanh Dat 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 Thanh Dat Investment, you can compare the effects of market volatilities on Petrovietnam Technical and Thanh Dat 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 Thanh Dat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrovietnam Technical and Thanh Dat.

Diversification Opportunities for Petrovietnam Technical and Thanh Dat

-0.61

Correlation Coefficient

Petrovietnam Technical  Thanh Dat

Excellent diversification

The 3 months correlation between Petrovietnam and Thanh is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Technical Service and Thanh Dat Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Dat Investment 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 Thanh Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Dat Investment has no effect on the direction of Petrovietnam Technical i.e., Petrovietnam Technical and Thanh Dat go up and down completely randomly.

Pair Corralation between Petrovietnam Technical and Thanh Dat

Assuming the 90 days trading horizon Petrovietnam Technical is expected to generate 2.5 times less return on investment than Thanh Dat. But when comparing it to its historical volatility, Petrovietnam Technical Services is 1.64 times less risky than Thanh Dat. It trades about 0.05 of its potential returns per unit of risk. Thanh Dat Investment is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  945,180  in Thanh Dat Investment on September 28, 2024 and sell it today you would earn a total of  1,824,820  from holding Thanh Dat Investment or generate 193.07% return on investment over 90 days.

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

Petrovietnam Technical Service  vs.  Thanh Dat Investment

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.

Thanh Dat Investment

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thanh Dat Investment are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Thanh Dat may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petrovietnam Technical and Thanh Dat

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

The idea behind Petrovietnam Technical Services and Thanh Dat Investment 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.