Correlation Between Vietnam Petroleum and Global Electrical
Can any of the company-specific risk be diversified away by investing in both Vietnam Petroleum and Global Electrical 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 Global Electrical 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 Global Electrical Technology, you can compare the effects of market volatilities on Vietnam Petroleum and Global Electrical 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 Global Electrical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Petroleum and Global Electrical.
Diversification Opportunities for Vietnam Petroleum and Global Electrical
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vietnam and Global is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and Global Electrical Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Electrical 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 Global Electrical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Electrical has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and Global Electrical go up and down completely randomly.
Pair Corralation between Vietnam Petroleum and Global Electrical
Assuming the 90 days trading horizon Vietnam Petroleum Transport is expected to generate 0.4 times more return on investment than Global Electrical. However, Vietnam Petroleum Transport is 2.52 times less risky than Global Electrical. It trades about 0.22 of its potential returns per unit of risk. Global Electrical Technology is currently generating about -0.05 per unit of risk. If you would invest 1,280,000 in Vietnam Petroleum Transport on September 2, 2024 and sell it today you would earn a total of 140,000 from holding Vietnam Petroleum Transport or generate 10.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 54.55% |
| Values | Daily Returns |
Vietnam Petroleum Transport vs. Global Electrical Technology
Performance |
| Timeline |
| Vietnam Petroleum |
| Global Electrical |
Vietnam Petroleum and Global Electrical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Petroleum and Global Electrical
The main advantage of trading using opposite Vietnam Petroleum and Global Electrical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Petroleum position performs unexpectedly, Global Electrical 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 Global Electrical will offset losses from the drop in Global Electrical's long position.| Vietnam Petroleum vs. Everland Investment JSC | Vietnam Petroleum vs. Tin Nghia Industrial | Vietnam Petroleum vs. PV2 Investment JSC | Vietnam Petroleum vs. Vien Dong Investment |
| Global Electrical vs. DOMESCO Medical Import | Global Electrical vs. Binh Duong Trade | Global Electrical vs. Petrovietnam Technical Services | Global Electrical vs. VTC Telecommunications JSC |
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 File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
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