Correlation Between Construction JSC and PetroVietnam Transportation
Can any of the company-specific risk be diversified away by investing in both Construction JSC and PetroVietnam Transportation 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 Construction JSC and PetroVietnam Transportation into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Construction JSC No5 and PetroVietnam Transportation Corp, you can compare the effects of market volatilities on Construction JSC and PetroVietnam Transportation 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 Construction JSC with a short position of PetroVietnam Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction JSC and PetroVietnam Transportation.
Diversification Opportunities for Construction JSC and PetroVietnam Transportation
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Construction and PetroVietnam is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Construction JSC No5 and PetroVietnam Transportation Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PetroVietnam Transportation and Construction JSC 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 Construction JSC No5 are associated (or correlated) with PetroVietnam Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PetroVietnam Transportation has no effect on the direction of Construction JSC i.e., Construction JSC and PetroVietnam Transportation go up and down completely randomly.
Pair Corralation between Construction JSC and PetroVietnam Transportation
Assuming the 90 days trading horizon Construction JSC No5 is expected to generate 4.17 times more return on investment than PetroVietnam Transportation. However, Construction JSC is 4.17 times more volatile than PetroVietnam Transportation Corp. It trades about 0.03 of its potential returns per unit of risk. PetroVietnam Transportation Corp is currently generating about -0.01 per unit of risk. If you would invest 2,025,000 in Construction JSC No5 on August 28, 2024 and sell it today you would earn a total of 5,000 from holding Construction JSC No5 or generate 0.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Construction JSC No5 vs. PetroVietnam Transportation Co
Performance |
| Timeline |
| Construction JSC No5 |
| PetroVietnam Transportation |
Construction JSC and PetroVietnam Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Construction JSC and PetroVietnam Transportation
The main advantage of trading using opposite Construction JSC and PetroVietnam Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction JSC position performs unexpectedly, PetroVietnam Transportation 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 PetroVietnam Transportation will offset losses from the drop in PetroVietnam Transportation's long position.| Construction JSC vs. FIT INVEST JSC | Construction JSC vs. Damsan JSC | Construction JSC vs. An Phat Plastic | Construction JSC vs. APG Securities Joint |
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 Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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