Correlation Between PetroVietnam Transportation and Vnsteel Vicasa

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

Diversification Opportunities for PetroVietnam Transportation and Vnsteel Vicasa

-0.33

Correlation Coefficient

PetroVietnam Transportation  Vnsteel Vicasa

Very good diversification

The 3 months correlation between PetroVietnam and Vnsteel is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and Vnsteel Vicasa JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vnsteel Vicasa JSC 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 Vnsteel Vicasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vnsteel Vicasa JSC has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and Vnsteel Vicasa go up and down completely randomly.

Pair Corralation between PetroVietnam Transportation and Vnsteel Vicasa

Assuming the 90 days trading horizon PetroVietnam Transportation Corp is expected to under-perform the Vnsteel Vicasa. But the stock apears to be less risky and, when comparing its historical volatility, PetroVietnam Transportation Corp is 3.4 times less risky than Vnsteel Vicasa. The stock trades about -0.02 of its potential returns per unit of risk. The Vnsteel Vicasa JSC is currently generating about 0.43 of returns per unit of risk over similar time horizon. If you would invest  870,000  in Vnsteel Vicasa JSC on September 16, 2024 and sell it today you would earn a total of  770,000  from holding Vnsteel Vicasa JSC or generate 88.51% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	60.61%
Values	Daily Returns

PetroVietnam Transportation Co  vs.  Vnsteel Vicasa JSC

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.

Vnsteel Vicasa JSC

Risk-Adjusted Performance

33 of 100

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Vnsteel Vicasa JSC are ranked lower than 33 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vnsteel Vicasa displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with PetroVietnam Transportation and Vnsteel Vicasa

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

The idea behind PetroVietnam Transportation Corp and Vnsteel Vicasa 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.