Correlation Between Techcom Vietnam and PetroVietnam Drilling

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Can any of the company-specific risk be diversified away by investing in both Techcom Vietnam 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 Techcom Vietnam and PetroVietnam Drilling into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Techcom Vietnam REIT and PetroVietnam Drilling Well, you can compare the effects of market volatilities on Techcom Vietnam 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 Techcom Vietnam with a short position of PetroVietnam Drilling. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techcom Vietnam and PetroVietnam Drilling.

Diversification Opportunities for Techcom Vietnam and PetroVietnam Drilling

0.33
  Correlation Coefficient

Weak diversification

The 3 months correlation between Techcom and PetroVietnam is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Techcom Vietnam REIT and PetroVietnam Drilling Well in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Drilling and Techcom Vietnam 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 Techcom Vietnam REIT 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 Techcom Vietnam i.e., Techcom Vietnam and PetroVietnam Drilling go up and down completely randomly.

Pair Corralation between Techcom Vietnam and PetroVietnam Drilling

Assuming the 90 days trading horizon Techcom Vietnam REIT is expected to generate 2.51 times more return on investment than PetroVietnam Drilling. However, Techcom Vietnam is 2.51 times more volatile than PetroVietnam Drilling Well. It trades about 0.0 of its potential returns per unit of risk. PetroVietnam Drilling Well is currently generating about -0.26 per unit of risk. If you would invest  537,000  in Techcom Vietnam REIT on September 2, 2024 and sell it today you would lose (6,000) from holding Techcom Vietnam REIT or give up 1.12% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Weak
Accuracy77.27%
ValuesDaily Returns

Techcom Vietnam REIT  vs.  PetroVietnam Drilling Well

 Performance 
       Timeline  
Techcom Vietnam REIT 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Techcom Vietnam REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.
PetroVietnam Drilling 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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 latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Techcom Vietnam and PetroVietnam Drilling Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Techcom Vietnam and PetroVietnam Drilling

The main advantage of trading using opposite Techcom Vietnam and PetroVietnam Drilling positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Techcom Vietnam 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.
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The idea behind Techcom Vietnam REIT 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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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 CEOs Directory module to screen CEOs from public companies around the world.

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