Correlation Between Petrovietnam Technical and Long An

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

Diversification Opportunities for Petrovietnam Technical and Long An

-0.61

Correlation Coefficient

Petrovietnam Technical  Long An

Excellent diversification

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

Pair Corralation between Petrovietnam Technical and Long An

Assuming the 90 days trading horizon Petrovietnam Technical is expected to generate 9.55 times less return on investment than Long An. In addition to that, Petrovietnam Technical is 1.06 times more volatile than Long An Food. It trades about 0.01 of its total potential returns per unit of risk. Long An Food is currently generating about 0.06 per unit of volatility. If you would invest  1,795,000  in Long An Food on September 28, 2024 and sell it today you would earn a total of  20,000  from holding Long An Food or generate 1.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

Petrovietnam Technical Service  vs.  Long An Food

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.

Long An Food

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Long An Food are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Long An may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Petrovietnam Technical and Long An

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

The idea behind Petrovietnam Technical Services and Long An Food 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 Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.