Correlation Between An Phat and Japan Vietnam

Can any of the company-specific risk be diversified away by investing in both An Phat and Japan Vietnam 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 An Phat and Japan Vietnam into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between An Phat Plastic and Japan Vietnam Medical, you can compare the effects of market volatilities on An Phat and Japan Vietnam 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 An Phat with a short position of Japan Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of An Phat and Japan Vietnam.

Diversification Opportunities for An Phat and Japan Vietnam

0.09

Correlation Coefficient

An Phat  Japan Vietnam

Significant diversification

The 3 months correlation between AAA and Japan is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding An Phat Plastic and Japan Vietnam Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Vietnam Medical and An Phat 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 An Phat Plastic are associated (or correlated) with Japan Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Vietnam Medical has no effect on the direction of An Phat i.e., An Phat and Japan Vietnam go up and down completely randomly.

Pair Corralation between An Phat and Japan Vietnam

Assuming the 90 days trading horizon An Phat Plastic is expected to under-perform the Japan Vietnam. But the stock apears to be less risky and, when comparing its historical volatility, An Phat Plastic is 2.32 times less risky than Japan Vietnam. The stock trades about -0.08 of its potential returns per unit of risk. The Japan Vietnam Medical is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest  380,000  in Japan Vietnam Medical on December 27, 2024 and sell it today you would earn a total of  150,000  from holding Japan Vietnam Medical or generate 39.47% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

An Phat Plastic  vs.  Japan Vietnam Medical

An Phat Plastic

Risk-Adjusted Performance

Very Weak

Over the last 90 days An Phat Plastic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, An Phat is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Japan Vietnam Medical

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Vietnam Medical are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Japan Vietnam displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with An Phat and Japan Vietnam

The main advantage of trading using opposite An Phat and Japan Vietnam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if An Phat position performs unexpectedly, Japan Vietnam 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 Japan Vietnam will offset losses from the drop in Japan Vietnam's long position.

The idea behind An Phat Plastic and Japan Vietnam Medical pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.