Correlation Between Petrolimex International and Vietnam National
Can any of the company-specific risk be diversified away by investing in both Petrolimex International and Vietnam National 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 Petrolimex International and Vietnam National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrolimex International Trading and Vietnam National Reinsurance, you can compare the effects of market volatilities on Petrolimex International and Vietnam National 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 Petrolimex International with a short position of Vietnam National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrolimex International and Vietnam National.
Diversification Opportunities for Petrolimex International and Vietnam National
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petrolimex and Vietnam is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Petrolimex International Tradi and Vietnam National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam National Rei and Petrolimex International 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 Petrolimex International Trading are associated (or correlated) with Vietnam National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam National Rei has no effect on the direction of Petrolimex International i.e., Petrolimex International and Vietnam National go up and down completely randomly.
Pair Corralation between Petrolimex International and Vietnam National
Assuming the 90 days trading horizon Petrolimex International Trading is expected to generate 5.39 times more return on investment than Vietnam National. However, Petrolimex International is 5.39 times more volatile than Vietnam National Reinsurance. It trades about 0.0 of its potential returns per unit of risk. Vietnam National Reinsurance is currently generating about -0.04 per unit of risk. If you would invest 519,000 in Petrolimex International Trading on September 1, 2024 and sell it today you would lose (4,000) from holding Petrolimex International Trading or give up 0.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Petrolimex International Tradi vs. Vietnam National Reinsurance
Performance |
| Timeline |
| Petrolimex International |
| Vietnam National Rei |
Petrolimex International and Vietnam National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrolimex International and Vietnam National
The main advantage of trading using opposite Petrolimex International and Vietnam National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrolimex International position performs unexpectedly, Vietnam National 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 National will offset losses from the drop in Vietnam National's long position.| Petrolimex International vs. FIT INVEST JSC | Petrolimex International vs. Damsan JSC | Petrolimex International vs. An Phat Plastic | Petrolimex International vs. Alphanam ME |
| Vietnam National vs. Vietnam Airlines JSC | Vietnam National vs. Development Investment Construction | Vietnam National vs. Military Insurance Corp | Vietnam National vs. Petrolimex International Trading |
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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