Correlation Between BIDV Insurance and POT

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

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

Diversification Opportunities for BIDV Insurance and POT

-0.62

Correlation Coefficient

BIDV Insurance  POT

Excellent diversification

The 3 months correlation between BIDV and POT is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding BIDV Insurance Corp and PostTelecommunication Equipmen in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PostTelecommunication and BIDV Insurance 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 BIDV Insurance Corp are associated (or correlated) with POT. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PostTelecommunication has no effect on the direction of BIDV Insurance i.e., BIDV Insurance and POT go up and down completely randomly.

Pair Corralation between BIDV Insurance and POT

Assuming the 90 days trading horizon BIDV Insurance Corp is expected to generate 0.46 times more return on investment than POT. However, BIDV Insurance Corp is 2.19 times less risky than POT. It trades about 0.05 of its potential returns per unit of risk. PostTelecommunication Equipment is currently generating about 0.01 per unit of risk. If you would invest  2,409,064  in BIDV Insurance Corp on October 7, 2024 and sell it today you would earn a total of  990,936  from holding BIDV Insurance Corp or generate 41.13% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	73.63%
Values	Daily Returns

BIDV Insurance Corp  vs.  PostTelecommunication Equipmen

BIDV Insurance Corp

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in BIDV Insurance Corp are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, BIDV Insurance may actually be approaching a critical reversion point that can send shares even higher in February 2025.

PostTelecommunication

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with BIDV Insurance and POT

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

The idea behind BIDV Insurance Corp and PostTelecommunication Equipment 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.