Correlation Between PetroVietnam Transportation and Vu Dang
Can any of the company-specific risk be diversified away by investing in both PetroVietnam Transportation and Vu Dang 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 Vu Dang 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 Vu Dang Investment, you can compare the effects of market volatilities on PetroVietnam Transportation and Vu Dang 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 Vu Dang. Check out your portfolio center. Please also check ongoing floating volatility patterns of PetroVietnam Transportation and Vu Dang.
Diversification Opportunities for PetroVietnam Transportation and Vu Dang
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between PetroVietnam and SVD is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding PetroVietnam Transportation Co and Vu Dang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vu Dang Investment 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 Vu Dang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vu Dang Investment has no effect on the direction of PetroVietnam Transportation i.e., PetroVietnam Transportation and Vu Dang go up and down completely randomly.
Pair Corralation between PetroVietnam Transportation and Vu Dang
Assuming the 90 days trading horizon PetroVietnam Transportation Corp is expected to under-perform the Vu Dang. But the stock apears to be less risky and, when comparing its historical volatility, PetroVietnam Transportation Corp is 2.24 times less risky than Vu Dang. The stock trades about -0.1 of its potential returns per unit of risk. The Vu Dang Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 315,000 in Vu Dang Investment on November 6, 2024 and sell it today you would earn a total of 4,000 from holding Vu Dang Investment or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
PetroVietnam Transportation Co vs. Vu Dang Investment
Performance |
| Timeline |
| PetroVietnam Transportation |
| Vu Dang Investment |
PetroVietnam Transportation and Vu Dang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with PetroVietnam Transportation and Vu Dang
The main advantage of trading using opposite PetroVietnam Transportation and Vu Dang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if PetroVietnam Transportation position performs unexpectedly, Vu Dang 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 Vu Dang will offset losses from the drop in Vu Dang's long position.The idea behind PetroVietnam Transportation Corp and Vu Dang Investment 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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