Correlation Between PetroVietnam Transportation and Petrolimex Information
Can any of the company-specific risk be diversified away by investing in both PetroVietnam Transportation and Petrolimex Information 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 Petrolimex Information 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 Petrolimex Information Technology, you can compare the effects of market volatilities on PetroVietnam Transportation and Petrolimex Information 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 Petrolimex Information. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Transportation and Petrolimex Information.
Diversification Opportunities for PetroVietnam Transportation and Petrolimex Information
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between PetroVietnam and Petrolimex is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and Petrolimex Information Technol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Information 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 Petrolimex Information. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Information has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and Petrolimex Information go up and down completely randomly.
Pair Corralation between PetroVietnam Transportation and Petrolimex Information
Assuming the 90 days trading horizon PetroVietnam Transportation is expected to generate 3.07 times less return on investment than Petrolimex Information. But when comparing it to its historical volatility, PetroVietnam Transportation Corp is 2.59 times less risky than Petrolimex Information. It trades about 0.04 of its potential returns per unit of risk. Petrolimex Information Technology is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,062,667 in Petrolimex Information Technology on November 28, 2024 and sell it today you would earn a total of 917,333 from holding Petrolimex Information Technology or generate 44.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 54.99% |
| Values | Daily Returns |
PetroVietnam Transportation Co vs. Petrolimex Information Technol
Performance |
| Timeline |
| PetroVietnam Transportation |
| Petrolimex Information |
PetroVietnam Transportation and Petrolimex Information Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroVietnam Transportation and Petrolimex Information
The main advantage of trading using opposite PetroVietnam Transportation and Petrolimex Information positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroVietnam Transportation position performs unexpectedly, Petrolimex Information 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 Petrolimex Information will offset losses from the drop in Petrolimex Information's long position.The idea behind PetroVietnam Transportation Corp and Petrolimex Information Technology 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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