Correlation Between Vietnam Petroleum and LDG Investment
Can any of the company-specific risk be diversified away by investing in both Vietnam Petroleum and LDG Investment 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 LDG Investment 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 LDG Investment JSC, you can compare the effects of market volatilities on Vietnam Petroleum and LDG Investment 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 LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Petroleum and LDG Investment.
Diversification Opportunities for Vietnam Petroleum and LDG Investment
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vietnam and LDG is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and LDG Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LDG Investment JSC 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 LDG Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LDG Investment JSC has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and LDG Investment go up and down completely randomly.
Pair Corralation between Vietnam Petroleum and LDG Investment
Assuming the 90 days trading horizon Vietnam Petroleum is expected to generate 1.76 times less return on investment than LDG Investment. But when comparing it to its historical volatility, Vietnam Petroleum Transport is 1.47 times less risky than LDG Investment. It trades about 0.41 of its potential returns per unit of risk. LDG Investment JSC is currently generating about 0.49 of returns per unit of risk over similar time horizon. If you would invest 180,000 in LDG Investment JSC on November 28, 2024 and sell it today you would earn a total of 45,000 from holding LDG Investment JSC or generate 25.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Petroleum Transport vs. LDG Investment JSC
Performance |
| Timeline |
| Vietnam Petroleum |
| LDG Investment JSC |
Vietnam Petroleum and LDG Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Petroleum and LDG Investment
The main advantage of trading using opposite Vietnam Petroleum and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Petroleum position performs unexpectedly, LDG Investment 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 LDG Investment will offset losses from the drop in LDG Investment's long position.| Vietnam Petroleum vs. Pacific Petroleum Transportation | Vietnam Petroleum vs. Taseco Air Services | Vietnam Petroleum vs. Ducgiang Chemicals Detergent | Vietnam Petroleum vs. Transimex Transportation JSC |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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