Correlation Between Vietnam Airlines and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Vietnam Airlines 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 Vietnam Airlines and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam Airlines JSC and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Vietnam Airlines 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 Vietnam Airlines with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Airlines and Petrolimex Petrochemical.
Diversification Opportunities for Vietnam Airlines and Petrolimex Petrochemical
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vietnam and Petrolimex is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Airlines JSC and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Vietnam Airlines 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 Airlines JSC 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 Vietnam Airlines i.e., Vietnam Airlines and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Vietnam Airlines and Petrolimex Petrochemical
Assuming the 90 days trading horizon Vietnam Airlines JSC is expected to generate 1.38 times more return on investment than Petrolimex Petrochemical. However, Vietnam Airlines is 1.38 times more volatile than Petrolimex Petrochemical JSC. It trades about 0.08 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 1,365,000 in Vietnam Airlines JSC on August 31, 2024 and sell it today you would earn a total of 1,425,000 from holding Vietnam Airlines JSC or generate 104.4% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 99.73% |
| Values | Daily Returns |
Vietnam Airlines JSC vs. Petrolimex Petrochemical JSC
Performance |
| Timeline |
| Vietnam Airlines JSC |
| Petrolimex Petrochemical |
Vietnam Airlines and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Airlines and Petrolimex Petrochemical
The main advantage of trading using opposite Vietnam Airlines and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Airlines 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.| Vietnam Airlines vs. Song Hong Garment | Vietnam Airlines vs. Alphanam ME | Vietnam Airlines vs. Hochiminh City Metal | Vietnam Airlines vs. Atesco Industrial Cartering |
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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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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