Correlation Between Asia Commercial and PetroVietnam Transportation
Can any of the company-specific risk be diversified away by investing in both Asia Commercial and PetroVietnam Transportation 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 Asia Commercial and PetroVietnam Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Asia Commercial Bank and PetroVietnam Transportation Corp, you can compare the effects of market volatilities on Asia Commercial and PetroVietnam Transportation 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 Asia Commercial with a short position of PetroVietnam Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Commercial and PetroVietnam Transportation.
Diversification Opportunities for Asia Commercial and PetroVietnam Transportation
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Asia and PetroVietnam is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Asia Commercial Bank and PetroVietnam Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Transportation and Asia Commercial 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 Asia Commercial Bank are associated (or correlated) with PetroVietnam Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroVietnam Transportation has no effect on the direction of Asia Commercial i.e., Asia Commercial and PetroVietnam Transportation go up and down completely randomly.
Pair Corralation between Asia Commercial and PetroVietnam Transportation
Assuming the 90 days trading horizon Asia Commercial is expected to generate 1.02 times less return on investment than PetroVietnam Transportation. But when comparing it to its historical volatility, Asia Commercial Bank is 1.27 times less risky than PetroVietnam Transportation. It trades about 0.06 of its potential returns per unit of risk. PetroVietnam Transportation Corp is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 1,733,509 in PetroVietnam Transportation Corp on September 2, 2024 and sell it today you would earn a total of 966,491 from holding PetroVietnam Transportation Corp or generate 55.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Asia Commercial Bank vs. PetroVietnam Transportation Co
Performance |
| Timeline |
| Asia Commercial Bank |
| PetroVietnam Transportation |
Asia Commercial and PetroVietnam Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Asia Commercial and PetroVietnam Transportation
The main advantage of trading using opposite Asia Commercial and PetroVietnam Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Asia Commercial position performs unexpectedly, PetroVietnam Transportation 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 Transportation will offset losses from the drop in PetroVietnam Transportation's long position.| Asia Commercial vs. FIT INVEST JSC | Asia Commercial vs. Damsan JSC | Asia Commercial vs. An Phat Plastic | Asia Commercial vs. Alphanam ME |
| PetroVietnam Transportation vs. Da Nang Construction | PetroVietnam Transportation vs. Danang Rubber JSC | PetroVietnam Transportation vs. Thong Nhat Rubber | PetroVietnam Transportation vs. Dong Nai Plastic |
Check out your portfolio center.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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.
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