Correlation Between Vu Dang and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Vu Dang and Petrolimex Petrochemical 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 Vu Dang and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vu Dang Investment and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Vu Dang and Petrolimex Petrochemical 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 Vu Dang with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vu Dang and Petrolimex Petrochemical.
Diversification Opportunities for Vu Dang and Petrolimex Petrochemical
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between SVD and Petrolimex is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Vu Dang Investment and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Vu Dang 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 Vu Dang Investment are associated (or correlated) with Petrolimex Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Petrochemical has no effect on the direction of Vu Dang i.e., Vu Dang and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Vu Dang and Petrolimex Petrochemical
Assuming the 90 days trading horizon Vu Dang Investment is expected to under-perform the Petrolimex Petrochemical. In addition to that, Vu Dang is 1.19 times more volatile than Petrolimex Petrochemical JSC. It trades about -0.04 of its total potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.28 per unit of volatility. If you would invest 2,330,000 in Petrolimex Petrochemical JSC on November 8, 2024 and sell it today you would earn a total of 250,000 from holding Petrolimex Petrochemical JSC or generate 10.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vu Dang Investment vs. Petrolimex Petrochemical JSC
Performance |
| Timeline |
| Vu Dang Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Petrolimex Petrochemical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Vu Dang and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vu Dang and Petrolimex Petrochemical
The main advantage of trading using opposite Vu Dang and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vu Dang position performs unexpectedly, Petrolimex Petrochemical 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 Petrochemical will offset losses from the drop in Petrolimex Petrochemical's long position.| Vu Dang vs. Vinhomes JSC | Vu Dang vs. SMC Investment Trading | Vu Dang vs. Everland Investment JSC | Vu Dang vs. Ducgiang Chemicals Detergent |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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