Correlation Between Hochiminh City and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Petrolimex Petrochemical 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 Hochiminh City and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hochiminh City Metal and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Hochiminh City and Petrolimex Petrochemical 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 Hochiminh City with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Petrolimex Petrochemical.
Diversification Opportunities for Hochiminh City and Petrolimex Petrochemical
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hochiminh and Petrolimex is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Hochiminh City 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 Hochiminh City Metal are associated (or correlated) with Petrolimex Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Petrochemical has no effect on the direction of Hochiminh City i.e., Hochiminh City and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Hochiminh City and Petrolimex Petrochemical
Assuming the 90 days trading horizon Hochiminh City Metal is expected to generate 0.69 times more return on investment than Petrolimex Petrochemical. However, Hochiminh City Metal is 1.44 times less risky than Petrolimex Petrochemical. It trades about 0.03 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about -0.06 per unit of risk. If you would invest 972,619 in Hochiminh City Metal on August 31, 2024 and sell it today you would earn a total of 142,381 from holding Hochiminh City Metal or generate 14.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochiminh City Metal vs. Petrolimex Petrochemical JSC
Performance |
| Timeline |
| Hochiminh City Metal |
| Petrolimex Petrochemical |
Hochiminh City and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Petrolimex Petrochemical
The main advantage of trading using opposite Hochiminh City and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Petrolimex Petrochemical 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 Petrolimex Petrochemical will offset losses from the drop in Petrolimex Petrochemical's long position.| Hochiminh City vs. VTC Telecommunications JSC | Hochiminh City vs. DOMESCO Medical Import | Hochiminh City vs. Elcom Technology Communications | Hochiminh City vs. Tri Viet Management |
| Petrolimex Petrochemical vs. Pha Le Plastics | Petrolimex Petrochemical vs. TDG Global Investment | Petrolimex Petrochemical vs. HUD1 Investment and | Petrolimex Petrochemical vs. Materials Petroleum JSC |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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