Correlation Between Vietnam National and Petrolimex Petrochemical
Can any of the company-specific risk be diversified away by investing in both Vietnam National and Petrolimex Petrochemical 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 National and Petrolimex Petrochemical into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam National Reinsurance and Petrolimex Petrochemical JSC, you can compare the effects of market volatilities on Vietnam National and Petrolimex Petrochemical 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 National with a short position of Petrolimex Petrochemical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam National and Petrolimex Petrochemical.
Diversification Opportunities for Vietnam National and Petrolimex Petrochemical
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vietnam and Petrolimex is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam National Reinsurance and Petrolimex Petrochemical JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Petrolimex Petrochemical and Vietnam National 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 National Reinsurance are associated (or correlated) with Petrolimex Petrochemical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Petrolimex Petrochemical has no effect on the direction of Vietnam National i.e., Vietnam National and Petrolimex Petrochemical go up and down completely randomly.
Pair Corralation between Vietnam National and Petrolimex Petrochemical
Assuming the 90 days trading horizon Vietnam National is expected to generate 1.43 times less return on investment than Petrolimex Petrochemical. But when comparing it to its historical volatility, Vietnam National Reinsurance is 1.72 times less risky than Petrolimex Petrochemical. It trades about 0.23 of its potential returns per unit of risk. Petrolimex Petrochemical JSC is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 2,270,000 in Petrolimex Petrochemical JSC on October 30, 2024 and sell it today you would earn a total of 190,000 from holding Petrolimex Petrochemical JSC or generate 8.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam National Reinsurance vs. Petrolimex Petrochemical JSC
Performance |
| Timeline |
| Vietnam National Rei |
| Petrolimex Petrochemical |
Vietnam National and Petrolimex Petrochemical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam National and Petrolimex Petrochemical
The main advantage of trading using opposite Vietnam National and Petrolimex Petrochemical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam National position performs unexpectedly, Petrolimex Petrochemical 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 Petrolimex Petrochemical will offset losses from the drop in Petrolimex Petrochemical's long position.| Vietnam National vs. Viettel Construction JSC | Vietnam National vs. Binhthuan Agriculture Services | Vietnam National vs. 1369 Construction JSC | Vietnam National vs. Sao Ta Foods |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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