Correlation Between Plastic Additives and PetroVietnam Transportation
Can any of the company-specific risk be diversified away by investing in both Plastic Additives and PetroVietnam Transportation 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 Plastic Additives and PetroVietnam Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Plastic Additives JSC and PetroVietnam Transportation Corp, you can compare the effects of market volatilities on Plastic Additives and PetroVietnam Transportation 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 Plastic Additives with a short position of PetroVietnam Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Plastic Additives and PetroVietnam Transportation.
Diversification Opportunities for Plastic Additives and PetroVietnam Transportation
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Plastic and PetroVietnam is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Plastic Additives JSC and PetroVietnam Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Transportation and Plastic Additives 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 Plastic Additives JSC are associated (or correlated) with PetroVietnam Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroVietnam Transportation has no effect on the direction of Plastic Additives i.e., Plastic Additives and PetroVietnam Transportation go up and down completely randomly.
Pair Corralation between Plastic Additives and PetroVietnam Transportation
Assuming the 90 days trading horizon Plastic Additives JSC is expected to generate 1.92 times more return on investment than PetroVietnam Transportation. However, Plastic Additives is 1.92 times more volatile than PetroVietnam Transportation Corp. It trades about 0.07 of its potential returns per unit of risk. PetroVietnam Transportation Corp is currently generating about 0.04 per unit of risk. If you would invest 690,000 in Plastic Additives JSC on September 1, 2024 and sell it today you would earn a total of 290,000 from holding Plastic Additives JSC or generate 42.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.4% |
| Values | Daily Returns |
Plastic Additives JSC vs. PetroVietnam Transportation Co
Performance |
| Timeline |
| Plastic Additives JSC |
| PetroVietnam Transportation |
Plastic Additives and PetroVietnam Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Plastic Additives and PetroVietnam Transportation
The main advantage of trading using opposite Plastic Additives and PetroVietnam Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Plastic Additives position performs unexpectedly, PetroVietnam Transportation 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 Transportation will offset losses from the drop in PetroVietnam Transportation's long position.| Plastic Additives vs. Song Hong Garment | Plastic Additives vs. Alphanam ME | Plastic Additives vs. Hochiminh City Metal | Plastic Additives vs. Atesco Industrial Cartering |
| PetroVietnam Transportation vs. FIT INVEST JSC | PetroVietnam Transportation vs. Damsan JSC | PetroVietnam Transportation vs. An Phat Plastic | PetroVietnam Transportation 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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