Correlation Between Alphanam and Vietnam Dairy

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

By analyzing existing cross correlation between Alphanam ME and Vietnam Dairy Products, you can compare the effects of market volatilities on Alphanam and Vietnam Dairy 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 Vietnam Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and Vietnam Dairy.

Diversification Opportunities for Alphanam and Vietnam Dairy

0.93

Correlation Coefficient

Alphanam  Vietnam Dairy

Almost no diversification

The 3 months correlation between Alphanam and Vietnam is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Vietnam Dairy Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Dairy Products 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 Vietnam Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Dairy Products has no effect on the direction of Alphanam i.e., Alphanam and Vietnam Dairy go up and down completely randomly.

Pair Corralation between Alphanam and Vietnam Dairy

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the Vietnam Dairy. In addition to that, Alphanam is 3.08 times more volatile than Vietnam Dairy Products. It trades about -0.17 of its total potential returns per unit of risk. Vietnam Dairy Products is currently generating about -0.23 per unit of volatility. If you would invest  7,372,654  in Vietnam Dairy Products on September 12, 2024 and sell it today you would lose (962,654) from holding Vietnam Dairy Products or give up 13.06% of portfolio value over 90 days.

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

Alphanam ME  vs.  Vietnam Dairy Products

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 unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vietnam Dairy Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vietnam Dairy Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's primary indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Alphanam and Vietnam Dairy

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

The idea behind Alphanam ME and Vietnam Dairy Products 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.