Correlation Between Petrovietnam Technical and FIT INVEST

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

Diversification Opportunities for Petrovietnam Technical and FIT INVEST

0.46

Correlation Coefficient

Petrovietnam Technical  FIT INVEST

Very weak diversification

The 3 months correlation between Petrovietnam and FIT is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Technical Service and FIT INVEST JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT INVEST JSC 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 FIT INVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT INVEST JSC has no effect on the direction of Petrovietnam Technical i.e., Petrovietnam Technical and FIT INVEST go up and down completely randomly.

Pair Corralation between Petrovietnam Technical and FIT INVEST

Assuming the 90 days trading horizon Petrovietnam Technical Services is expected to under-perform the FIT INVEST. But the stock apears to be less risky and, when comparing its historical volatility, Petrovietnam Technical Services is 1.19 times less risky than FIT INVEST. The stock trades about -0.18 of its potential returns per unit of risk. The FIT INVEST JSC is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  425,000  in FIT INVEST JSC on September 5, 2024 and sell it today you would lose (9,000) from holding FIT INVEST JSC or give up 2.12% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.46%
Values	Daily Returns

Petrovietnam Technical Service  vs.  FIT INVEST JSC

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.

FIT INVEST JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FIT INVEST JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, FIT INVEST 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 Technical and FIT INVEST

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

The idea behind Petrovietnam Technical Services and FIT INVEST 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.