Correlation Between Vietnam Petroleum and Elcom Technology
Can any of the company-specific risk be diversified away by investing in both Vietnam Petroleum and Elcom Technology 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 Vietnam Petroleum and Elcom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam Petroleum Transport and Elcom Technology Communications, you can compare the effects of market volatilities on Vietnam Petroleum and Elcom Technology 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 Vietnam Petroleum with a short position of Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Petroleum and Elcom Technology.
Diversification Opportunities for Vietnam Petroleum and Elcom Technology
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vietnam and Elcom is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and Elcom Technology Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom Technology Com and Vietnam Petroleum 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 Vietnam Petroleum Transport are associated (or correlated) with Elcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom Technology Com has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and Elcom Technology go up and down completely randomly.
Pair Corralation between Vietnam Petroleum and Elcom Technology
Assuming the 90 days trading horizon Vietnam Petroleum Transport is expected to generate 1.46 times more return on investment than Elcom Technology. However, Vietnam Petroleum is 1.46 times more volatile than Elcom Technology Communications. It trades about 0.16 of its potential returns per unit of risk. Elcom Technology Communications is currently generating about 0.2 per unit of risk. If you would invest 1,280,000 in Vietnam Petroleum Transport on August 29, 2024 and sell it today you would earn a total of 105,000 from holding Vietnam Petroleum Transport or generate 8.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Petroleum Transport vs. Elcom Technology Communication
Performance |
| Timeline |
| Vietnam Petroleum |
| Elcom Technology Com |
Vietnam Petroleum and Elcom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Petroleum and Elcom Technology
The main advantage of trading using opposite Vietnam Petroleum and Elcom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Petroleum position performs unexpectedly, Elcom Technology 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 Elcom Technology will offset losses from the drop in Elcom Technology's long position.| Vietnam Petroleum vs. FIT INVEST JSC | Vietnam Petroleum vs. Damsan JSC | Vietnam Petroleum vs. An Phat Plastic | Vietnam Petroleum vs. Alphanam ME |
| Elcom Technology vs. FIT INVEST JSC | Elcom Technology vs. Damsan JSC | Elcom Technology vs. An Phat Plastic | Elcom Technology vs. Alphanam ME |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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