Correlation Between Vietnam Petroleum and Vietnam Technological

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

By analyzing existing cross correlation between Vietnam Petroleum Transport and Vietnam Technological And, you can compare the effects of market volatilities on Vietnam Petroleum and Vietnam Technological 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 Vietnam Petroleum with a short position of Vietnam Technological. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Petroleum and Vietnam Technological.

Diversification Opportunities for Vietnam Petroleum and Vietnam Technological

-0.05

Correlation Coefficient

Vietnam Petroleum  Vietnam Technological

Good diversification

The 3 months correlation between Vietnam and Vietnam is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and Vietnam Technological And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Technological And and Vietnam Petroleum 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 Vietnam Petroleum Transport are associated (or correlated) with Vietnam Technological. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Technological And has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and Vietnam Technological go up and down completely randomly.

Pair Corralation between Vietnam Petroleum and Vietnam Technological

Assuming the 90 days trading horizon Vietnam Petroleum Transport is expected to generate 1.56 times more return on investment than Vietnam Technological. However, Vietnam Petroleum is 1.56 times more volatile than Vietnam Technological And. It trades about 0.12 of its potential returns per unit of risk. Vietnam Technological And is currently generating about 0.14 per unit of risk. If you would invest  1,270,000  in Vietnam Petroleum Transport on September 15, 2024 and sell it today you would earn a total of  165,000  from holding Vietnam Petroleum Transport or generate 12.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Vietnam Petroleum Transport  vs.  Vietnam Technological And

Vietnam Petroleum

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Petroleum Transport are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Petroleum displayed solid returns over the last few months and may actually be approaching a breakup point.

Vietnam Technological And

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Technological And are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Vietnam Technological may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Vietnam Petroleum and Vietnam Technological

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

The idea behind Vietnam Petroleum Transport and Vietnam Technological And 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.