Correlation Between Vnsteel Vicasa and PetroVietnam Drilling

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

By analyzing existing cross correlation between Vnsteel Vicasa JSC and PetroVietnam Drilling Well, you can compare the effects of market volatilities on Vnsteel Vicasa and PetroVietnam Drilling 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 Vnsteel Vicasa with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vnsteel Vicasa and PetroVietnam Drilling.

Diversification Opportunities for Vnsteel Vicasa and PetroVietnam Drilling

-0.46

Correlation Coefficient

Vnsteel Vicasa  PetroVietnam Drilling

Very good diversification

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

Pair Corralation between Vnsteel Vicasa and PetroVietnam Drilling

Assuming the 90 days trading horizon Vnsteel Vicasa JSC is expected to generate 3.7 times more return on investment than PetroVietnam Drilling. However, Vnsteel Vicasa is 3.7 times more volatile than PetroVietnam Drilling Well. It trades about 0.19 of its potential returns per unit of risk. PetroVietnam Drilling Well is currently generating about -0.16 per unit of risk. If you would invest  872,000  in Vnsteel Vicasa JSC on September 29, 2024 and sell it today you would earn a total of  348,000  from holding Vnsteel Vicasa JSC or generate 39.91% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	66.15%
Values	Daily Returns

Vnsteel Vicasa JSC  vs.  PetroVietnam Drilling Well

Vnsteel Vicasa JSC

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vnsteel Vicasa JSC are ranked lower than 14 (%) 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.

PetroVietnam Drilling

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PetroVietnam Drilling Well 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 fundamental 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 Vnsteel Vicasa and PetroVietnam Drilling

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

The idea behind Vnsteel Vicasa JSC and PetroVietnam Drilling Well 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.