Correlation Between Investment and BIDV Insurance

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

By analyzing existing cross correlation between Investment and Industrial and BIDV Insurance Corp, you can compare the effects of market volatilities on Investment and BIDV Insurance 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 Investment with a short position of BIDV Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and BIDV Insurance.

Diversification Opportunities for Investment and BIDV Insurance

0.6

Correlation Coefficient

Investment  BIDV Insurance

Poor diversification

The 3 months correlation between Investment and BIDV is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Investment and Industrial and BIDV Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIDV Insurance Corp and Investment 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 Investment and Industrial are associated (or correlated) with BIDV Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIDV Insurance Corp has no effect on the direction of Investment i.e., Investment and BIDV Insurance go up and down completely randomly.

Pair Corralation between Investment and BIDV Insurance

Assuming the 90 days trading horizon Investment and Industrial is expected to generate 1.06 times more return on investment than BIDV Insurance. However, Investment is 1.06 times more volatile than BIDV Insurance Corp. It trades about 0.17 of its potential returns per unit of risk. BIDV Insurance Corp is currently generating about 0.06 per unit of risk. If you would invest  6,650,000  in Investment and Industrial on December 2, 2024 and sell it today you would earn a total of  920,000  from holding Investment and Industrial or generate 13.83% return on investment over 90 days.

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

Investment and Industrial  vs.  BIDV Insurance Corp

Investment and Industrial

Risk-Adjusted Performance

Good

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

BIDV Insurance Corp

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIDV Insurance Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, BIDV Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Investment and BIDV Insurance

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

The idea behind Investment and Industrial and BIDV Insurance Corp 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.