Correlation Between PetroVietnam Transportation and Educational Book

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

By analyzing existing cross correlation between PetroVietnam Transportation Corp and Educational Book In, you can compare the effects of market volatilities on PetroVietnam Transportation and Educational Book 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 Transportation with a short position of Educational Book. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Transportation and Educational Book.

Diversification Opportunities for PetroVietnam Transportation and Educational Book

-0.27

Correlation Coefficient

PetroVietnam Transportation  Educational Book

Very good diversification

The 3 months correlation between PetroVietnam and Educational is -0.27. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and Educational Book In in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Educational Book and PetroVietnam Transportation 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 Transportation Corp are associated (or correlated) with Educational Book. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Educational Book has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and Educational Book go up and down completely randomly.

Pair Corralation between PetroVietnam Transportation and Educational Book

Assuming the 90 days trading horizon PetroVietnam Transportation is expected to generate 1.61 times less return on investment than Educational Book. But when comparing it to its historical volatility, PetroVietnam Transportation Corp is 2.19 times less risky than Educational Book. It trades about 0.04 of its potential returns per unit of risk. Educational Book In is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,419,209  in Educational Book In on September 18, 2024 and sell it today you would earn a total of  120,791  from holding Educational Book In or generate 8.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	44.6%
Values	Daily Returns

PetroVietnam Transportation Co  vs.  Educational Book In

PetroVietnam Transportation

Risk-Adjusted Performance

0 of 100

Very Weak

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

Educational Book

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Educational Book In has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Educational Book 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 Transportation and Educational Book

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

The idea behind PetroVietnam Transportation Corp and Educational Book In 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.