Correlation Between Vietnam Airlines and Vietnam Petroleum
Can any of the company-specific risk be diversified away by investing in both Vietnam Airlines 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 Vietnam Airlines and Vietnam Petroleum 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 Vietnam Petroleum Transport, you can compare the effects of market volatilities on Vietnam Airlines 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 Vietnam Airlines with a short position of Vietnam Petroleum. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Airlines and Vietnam Petroleum.
Diversification Opportunities for Vietnam Airlines and Vietnam Petroleum
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vietnam and Vietnam is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Airlines JSC and Vietnam Petroleum Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Petroleum 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 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 Vietnam Airlines i.e., Vietnam Airlines and Vietnam Petroleum go up and down completely randomly.
Pair Corralation between Vietnam Airlines and Vietnam Petroleum
Assuming the 90 days trading horizon Vietnam Airlines JSC is expected to generate 1.41 times more return on investment than Vietnam Petroleum. However, Vietnam Airlines is 1.41 times more volatile than Vietnam Petroleum Transport. It trades about 0.07 of its potential returns per unit of risk. Vietnam Petroleum Transport is currently generating about -0.02 per unit of risk. If you would invest 2,600,000 in Vietnam Airlines JSC on September 14, 2024 and sell it today you would earn a total of 80,000 from holding Vietnam Airlines JSC or generate 3.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Airlines JSC vs. Vietnam Petroleum Transport
Performance |
| Timeline |
| Vietnam Airlines JSC |
| Vietnam Petroleum |
Vietnam Airlines and Vietnam Petroleum Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Airlines and Vietnam Petroleum
The main advantage of trading using opposite Vietnam Airlines and Vietnam Petroleum positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Airlines 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.| Vietnam Airlines vs. Vietnam Dairy Products | Vietnam Airlines vs. LDG Investment JSC | Vietnam Airlines vs. Petrovietnam Drilling Mud | Vietnam Airlines vs. Petrolimex Information Technology |
| Vietnam Petroleum vs. Danang Education Investment | Vietnam Petroleum vs. Construction And Investment | Vietnam Petroleum vs. Vietnam Airlines JSC | Vietnam Petroleum vs. PV2 Investment 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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