Correlation Between PetroVietnam Transportation and Vietnam JSCmmercial
Can any of the company-specific risk be diversified away by investing in both PetroVietnam Transportation and Vietnam JSCmmercial 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 Transportation and Vietnam JSCmmercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between PetroVietnam Transportation Corp and Vietnam JSCmmercial Bank, you can compare the effects of market volatilities on PetroVietnam Transportation and Vietnam JSCmmercial 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 Transportation with a short position of Vietnam JSCmmercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Transportation and Vietnam JSCmmercial.
Diversification Opportunities for PetroVietnam Transportation and Vietnam JSCmmercial
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PetroVietnam and Vietnam is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and Vietnam JSCmmercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam JSCmmercial Bank and PetroVietnam Transportation 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 Transportation Corp are associated (or correlated) with Vietnam JSCmmercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam JSCmmercial Bank has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and Vietnam JSCmmercial go up and down completely randomly.
Pair Corralation between PetroVietnam Transportation and Vietnam JSCmmercial
Assuming the 90 days trading horizon PetroVietnam Transportation is expected to generate 2.25 times less return on investment than Vietnam JSCmmercial. But when comparing it to its historical volatility, PetroVietnam Transportation Corp is 1.26 times less risky than Vietnam JSCmmercial. It trades about 0.2 of its potential returns per unit of risk. Vietnam JSCmmercial Bank is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 3,805,000 in Vietnam JSCmmercial Bank on November 28, 2024 and sell it today you would earn a total of 330,000 from holding Vietnam JSCmmercial Bank or generate 8.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroVietnam Transportation Co vs. Vietnam JSCmmercial Bank
Performance |
| Timeline |
| PetroVietnam Transportation |
| Vietnam JSCmmercial Bank |
PetroVietnam Transportation and Vietnam JSCmmercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroVietnam Transportation and Vietnam JSCmmercial
The main advantage of trading using opposite PetroVietnam Transportation and Vietnam JSCmmercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroVietnam Transportation position performs unexpectedly, Vietnam JSCmmercial 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 JSCmmercial will offset losses from the drop in Vietnam JSCmmercial's long position.The idea behind PetroVietnam Transportation Corp and Vietnam JSCmmercial Bank 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.
| Vietnam JSCmmercial vs. Vietnam Construction JSC | Vietnam JSCmmercial vs. Construction JSC No5 | Vietnam JSCmmercial vs. Vnsteel Vicasa JSC | Vietnam JSCmmercial vs. Pacific Petroleum Transportation |
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.
Other Complementary Tools
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Equity Search Search for actively traded equities including funds and ETFs from over 30 global markets | |
| Portfolio Rebalancing Analyze risk-adjusted returns against different time horizons to find asset-allocation targets | |
| Portfolio File Import Quickly import all of your third-party portfolios from your local drive in csv format | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk |