Correlation Between Alphanam and Lien Viet

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

By analyzing existing cross correlation between Alphanam ME and Lien Viet Post, you can compare the effects of market volatilities on Alphanam and Lien Viet 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 Alphanam with a short position of Lien Viet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and Lien Viet.

Diversification Opportunities for Alphanam and Lien Viet

-0.59

Correlation Coefficient

Alphanam  Lien Viet

Excellent diversification

The 3 months correlation between Alphanam and Lien is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Lien Viet Post in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lien Viet Post and Alphanam 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 Alphanam ME are associated (or correlated) with Lien Viet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lien Viet Post has no effect on the direction of Alphanam i.e., Alphanam and Lien Viet go up and down completely randomly.

Pair Corralation between Alphanam and Lien Viet

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the Lien Viet. But the stock apears to be less risky and, when comparing its historical volatility, Alphanam ME is 1.06 times less risky than Lien Viet. The stock trades about -0.04 of its potential returns per unit of risk. The Lien Viet Post is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,726,884  in Lien Viet Post on October 23, 2024 and sell it today you would earn a total of  438,116  from holding Lien Viet Post or generate 16.07% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	51.56%
Values	Daily Returns

Alphanam ME  vs.  Lien Viet Post

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Lien Viet Post

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Lien Viet Post are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Lien Viet displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphanam and Lien Viet

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

The idea behind Alphanam ME and Lien Viet Post 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.