Correlation Between PetroVietnam Transportation and Nam Kim
Can any of the company-specific risk be diversified away by investing in both PetroVietnam Transportation and Nam Kim 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 Nam Kim 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 Nam Kim Steel, you can compare the effects of market volatilities on PetroVietnam Transportation and Nam Kim 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 Nam Kim. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Transportation and Nam Kim.
Diversification Opportunities for PetroVietnam Transportation and Nam Kim
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between PetroVietnam and Nam is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and Nam Kim Steel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nam Kim Steel 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 Nam Kim. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nam Kim Steel has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and Nam Kim go up and down completely randomly.
Pair Corralation between PetroVietnam Transportation and Nam Kim
Assuming the 90 days trading horizon PetroVietnam Transportation Corp is expected to generate 0.53 times more return on investment than Nam Kim. However, PetroVietnam Transportation Corp is 1.88 times less risky than Nam Kim. It trades about -0.19 of its potential returns per unit of risk. Nam Kim Steel is currently generating about -0.22 per unit of risk. If you would invest 2,860,000 in PetroVietnam Transportation Corp on September 12, 2024 and sell it today you would lose (120,000) from holding PetroVietnam Transportation Corp or give up 4.2% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroVietnam Transportation Co vs. Nam Kim Steel
Performance |
| Timeline |
| PetroVietnam Transportation |
| Nam Kim Steel |
PetroVietnam Transportation and Nam Kim Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroVietnam Transportation and Nam Kim
The main advantage of trading using opposite PetroVietnam Transportation and Nam Kim positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroVietnam Transportation position performs unexpectedly, Nam Kim 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 Nam Kim will offset losses from the drop in Nam Kim's long position.The idea behind PetroVietnam Transportation Corp and Nam Kim Steel 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.
| Nam Kim vs. Japan Vietnam Medical | Nam Kim vs. PetroVietnam Transportation Corp | Nam Kim vs. Elcom Technology Communications | Nam Kim vs. FPT Digital Retail |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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