Correlation Between Vietnam Petroleum and Hanoi Plastics
Can any of the company-specific risk be diversified away by investing in both Vietnam Petroleum and Hanoi Plastics 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 Hanoi Plastics 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 Hanoi Plastics JSC, you can compare the effects of market volatilities on Vietnam Petroleum and Hanoi Plastics 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 Hanoi Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Petroleum and Hanoi Plastics.
Diversification Opportunities for Vietnam Petroleum and Hanoi Plastics
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vietnam and Hanoi is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and Hanoi Plastics JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Plastics 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 Hanoi Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Plastics JSC has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and Hanoi Plastics go up and down completely randomly.
Pair Corralation between Vietnam Petroleum and Hanoi Plastics
Assuming the 90 days trading horizon Vietnam Petroleum Transport is expected to generate 1.22 times more return on investment than Hanoi Plastics. However, Vietnam Petroleum is 1.22 times more volatile than Hanoi Plastics JSC. It trades about -0.06 of its potential returns per unit of risk. Hanoi Plastics JSC is currently generating about -0.09 per unit of risk. If you would invest 1,440,000 in Vietnam Petroleum Transport on September 12, 2024 and sell it today you would lose (35,000) from holding Vietnam Petroleum Transport or give up 2.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Petroleum Transport vs. Hanoi Plastics JSC
Performance |
| Timeline |
| Vietnam Petroleum |
| Hanoi Plastics JSC |
Vietnam Petroleum and Hanoi Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Petroleum and Hanoi Plastics
The main advantage of trading using opposite Vietnam Petroleum and Hanoi Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Petroleum position performs unexpectedly, Hanoi Plastics 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 Hanoi Plastics will offset losses from the drop in Hanoi Plastics' long position.| Vietnam Petroleum vs. FIT INVEST JSC | Vietnam Petroleum vs. Damsan JSC | Vietnam Petroleum vs. An Phat Plastic | Vietnam Petroleum vs. Alphanam ME |
| Hanoi Plastics vs. FIT INVEST JSC | Hanoi Plastics vs. Damsan JSC | Hanoi Plastics vs. An Phat Plastic | Hanoi Plastics 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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