Correlation Between Vietnam Petroleum and Pha Le
Can any of the company-specific risk be diversified away by investing in both Vietnam Petroleum and Pha Le 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 Pha Le 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 Pha Le Plastics, you can compare the effects of market volatilities on Vietnam Petroleum and Pha Le 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 Pha Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Petroleum and Pha Le.
Diversification Opportunities for Vietnam Petroleum and Pha Le
-0.68 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Vietnam and Pha is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Petroleum Transport and Pha Le Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Le Plastics 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 Pha Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Le Plastics has no effect on the direction of Vietnam Petroleum i.e., Vietnam Petroleum and Pha Le go up and down completely randomly.
Pair Corralation between Vietnam Petroleum and Pha Le
Assuming the 90 days trading horizon Vietnam Petroleum Transport is expected to under-perform the Pha Le. But the stock apears to be less risky and, when comparing its historical volatility, Vietnam Petroleum Transport is 1.47 times less risky than Pha Le. The stock trades about -0.06 of its potential returns per unit of risk. The Pha Le Plastics is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 447,000 in Pha Le Plastics on September 12, 2024 and sell it today you would earn a total of 21,000 from holding Pha Le Plastics or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Petroleum Transport vs. Pha Le Plastics
Performance |
| Timeline |
| Vietnam Petroleum |
| Pha Le Plastics |
Vietnam Petroleum and Pha Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Petroleum and Pha Le
The main advantage of trading using opposite Vietnam Petroleum and Pha Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Petroleum position performs unexpectedly, Pha Le 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 Pha Le will offset losses from the drop in Pha Le'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 |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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