Correlation Between Thanh Dat and Vietnam Petroleum
Can any of the company-specific risk be diversified away by investing in both Thanh Dat and Vietnam Petroleum 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 Thanh Dat and Vietnam Petroleum into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thanh Dat Investment and Vietnam Petroleum Transport, you can compare the effects of market volatilities on Thanh Dat and Vietnam Petroleum 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 Thanh Dat with a short position of Vietnam Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thanh Dat and Vietnam Petroleum.
Diversification Opportunities for Thanh Dat and Vietnam Petroleum
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Thanh and Vietnam is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Thanh Dat Investment and Vietnam Petroleum Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Petroleum and Thanh Dat 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 Thanh Dat Investment are associated (or correlated) with Vietnam Petroleum. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Petroleum has no effect on the direction of Thanh Dat i.e., Thanh Dat and Vietnam Petroleum go up and down completely randomly.
Pair Corralation between Thanh Dat and Vietnam Petroleum
Assuming the 90 days trading horizon Thanh Dat Investment is expected to generate 1.28 times more return on investment than Vietnam Petroleum. However, Thanh Dat is 1.28 times more volatile than Vietnam Petroleum Transport. It trades about 0.0 of its potential returns per unit of risk. Vietnam Petroleum Transport is currently generating about -0.06 per unit of risk. If you would invest 2,730,000 in Thanh Dat Investment on September 12, 2024 and sell it today you would lose (10,000) from holding Thanh Dat Investment or give up 0.37% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Thanh Dat Investment vs. Vietnam Petroleum Transport
Performance |
| Timeline |
| Thanh Dat Investment |
| Vietnam Petroleum |
Thanh Dat and Vietnam Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thanh Dat and Vietnam Petroleum
The main advantage of trading using opposite Thanh Dat and Vietnam Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thanh Dat position performs unexpectedly, Vietnam Petroleum 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 Petroleum will offset losses from the drop in Vietnam Petroleum's long position.| Thanh Dat vs. FIT INVEST JSC | Thanh Dat vs. Damsan JSC | Thanh Dat vs. An Phat Plastic | Thanh Dat vs. Alphanam ME |
| Vietnam Petroleum vs. FIT INVEST JSC | Vietnam Petroleum vs. Damsan JSC | Vietnam Petroleum vs. An Phat Plastic | Vietnam Petroleum vs. Alphanam ME |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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