Correlation Between Asia Commercial and VietinBank Securities

Can any of the company-specific risk be diversified away by investing in both Asia Commercial and VietinBank Securities 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 Asia Commercial and VietinBank Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Asia Commercial Bank and VietinBank Securities JSC, you can compare the effects of market volatilities on Asia Commercial and VietinBank Securities 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 Asia Commercial with a short position of VietinBank Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Asia Commercial and VietinBank Securities.

Diversification Opportunities for Asia Commercial and VietinBank Securities

0.82

Correlation Coefficient

Asia Commercial  VietinBank Securities

Very poor diversification

The 3 months correlation between Asia and VietinBank is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Asia Commercial Bank and VietinBank Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VietinBank Securities JSC and Asia Commercial 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 Asia Commercial Bank are associated (or correlated) with VietinBank Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VietinBank Securities JSC has no effect on the direction of Asia Commercial i.e., Asia Commercial and VietinBank Securities go up and down completely randomly.

Pair Corralation between Asia Commercial and VietinBank Securities

Assuming the 90 days trading horizon Asia Commercial is expected to generate 2.89 times less return on investment than VietinBank Securities. But when comparing it to its historical volatility, Asia Commercial Bank is 1.99 times less risky than VietinBank Securities. It trades about 0.12 of its potential returns per unit of risk. VietinBank Securities JSC is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  3,540,000  in VietinBank Securities JSC on December 22, 2024 and sell it today you would earn a total of  510,000  from holding VietinBank Securities JSC or generate 14.41% return on investment over 90 days.

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

Asia Commercial Bank  vs.  VietinBank Securities JSC

Asia Commercial Bank

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Asia Commercial Bank are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental drivers, Asia Commercial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

VietinBank Securities JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in VietinBank Securities JSC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, VietinBank Securities displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Asia Commercial and VietinBank Securities

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

The idea behind Asia Commercial Bank and VietinBank Securities JSC 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.

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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..