Correlation Between Petrovietnam Technical and Transimex Saigon
Can any of the company-specific risk be diversified away by investing in both Petrovietnam Technical and Transimex Saigon 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 Petrovietnam Technical and Transimex Saigon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Petrovietnam Technical Services and Transimex Saigon Corp, you can compare the effects of market volatilities on Petrovietnam Technical and Transimex Saigon 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 Petrovietnam Technical with a short position of Transimex Saigon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Petrovietnam Technical and Transimex Saigon.
Diversification Opportunities for Petrovietnam Technical and Transimex Saigon
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Petrovietnam and Transimex is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Petrovietnam Technical Service and Transimex Saigon Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Saigon Corp and Petrovietnam Technical 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 Petrovietnam Technical Services are associated (or correlated) with Transimex Saigon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Saigon Corp has no effect on the direction of Petrovietnam Technical i.e., Petrovietnam Technical and Transimex Saigon go up and down completely randomly.
Pair Corralation between Petrovietnam Technical and Transimex Saigon
Assuming the 90 days trading horizon Petrovietnam Technical Services is expected to under-perform the Transimex Saigon. In addition to that, Petrovietnam Technical is 1.28 times more volatile than Transimex Saigon Corp. It trades about -0.12 of its total potential returns per unit of risk. Transimex Saigon Corp is currently generating about -0.03 per unit of volatility. If you would invest 4,270,000 in Transimex Saigon Corp on October 23, 2024 and sell it today you would lose (30,000) from holding Transimex Saigon Corp or give up 0.7% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.0% |
| Values | Daily Returns |
Petrovietnam Technical Service vs. Transimex Saigon Corp
Performance |
| Timeline |
| Petrovietnam Technical |
| Transimex Saigon Corp |
Petrovietnam Technical and Transimex Saigon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Petrovietnam Technical and Transimex Saigon
The main advantage of trading using opposite Petrovietnam Technical and Transimex Saigon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Petrovietnam Technical position performs unexpectedly, Transimex Saigon 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 Transimex Saigon will offset losses from the drop in Transimex Saigon's long position.The idea behind Petrovietnam Technical Services and Transimex Saigon Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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