Correlation Between PetroVietnam Transportation and Nha Be

Can any of the company-specific risk be diversified away by investing in both PetroVietnam Transportation and Nha Be 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 Nha Be 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 Nha Be Water, you can compare the effects of market volatilities on PetroVietnam Transportation and Nha Be 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 Nha Be. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Transportation and Nha Be.

Diversification Opportunities for PetroVietnam Transportation and Nha Be

0.15

Correlation Coefficient

PetroVietnam Transportation  Nha Be

Average diversification

The 3 months correlation between PetroVietnam and Nha is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and Nha Be Water in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nha Be Water 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 Nha Be. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nha Be Water has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and Nha Be go up and down completely randomly.

Pair Corralation between PetroVietnam Transportation and Nha Be

Assuming the 90 days trading horizon PetroVietnam Transportation Corp is expected to generate 0.22 times more return on investment than Nha Be. However, PetroVietnam Transportation Corp is 4.5 times less risky than Nha Be. It trades about -0.01 of its potential returns per unit of risk. Nha Be Water is currently generating about -0.04 per unit of risk. If you would invest  2,795,000  in PetroVietnam Transportation Corp on September 29, 2024 and sell it today you would lose (25,000) from holding PetroVietnam Transportation Corp or give up 0.89% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	41.54%
Values	Daily Returns

PetroVietnam Transportation Co  vs.  Nha Be Water

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.

Nha Be Water

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Nha Be Water 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.

Pair Trading with PetroVietnam Transportation and Nha Be

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

The idea behind PetroVietnam Transportation Corp and Nha Be Water 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.