Correlation Between Vietnam Petroleum and KSD
Can any of the company-specific risk be diversified away by investing in both Vietnam Petroleum and KSD 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 KSD 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 KSD, you can compare the effects of market volatilities on Vietnam Petroleum and KSD 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 KSD. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Petroleum and KSD.
Diversification Opportunities for Vietnam Petroleum and KSD
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vietnam and KSD is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and KSD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KSD 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 KSD. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KSD has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and KSD go up and down completely randomly.
Pair Corralation between Vietnam Petroleum and KSD
Assuming the 90 days trading horizon Vietnam Petroleum is expected to generate 1.61 times less return on investment than KSD. But when comparing it to its historical volatility, Vietnam Petroleum Transport is 1.56 times less risky than KSD. It trades about 0.06 of its potential returns per unit of risk. KSD is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 350,000 in KSD on September 14, 2024 and sell it today you would earn a total of 140,000 from holding KSD or generate 40.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 80.08% |
| Values | Daily Returns |
Vietnam Petroleum Transport vs. KSD
Performance |
| Timeline |
| Vietnam Petroleum |
| KSD |
Vietnam Petroleum and KSD Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Petroleum and KSD
The main advantage of trading using opposite Vietnam Petroleum and KSD positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Petroleum position performs unexpectedly, KSD 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 KSD will offset losses from the drop in KSD's long position.| Vietnam Petroleum vs. Danang Education Investment | Vietnam Petroleum vs. Construction And Investment | Vietnam Petroleum vs. Vietnam Airlines JSC | Vietnam Petroleum vs. PV2 Investment JSC |
| KSD vs. Transport and Industry | KSD vs. Vietnam Petroleum Transport | KSD vs. Vinhomes JSC | KSD vs. Hai An Transport |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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