Correlation Between BaoMinh Insurance and FPT Securities

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

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

Diversification Opportunities for BaoMinh Insurance and FPT Securities

0.49

Correlation Coefficient

BaoMinh Insurance  FPT Securities

Very weak diversification

The 3 months correlation between BaoMinh and FPT is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding BaoMinh Insurance Corp and FPT Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Securities JSC and BaoMinh 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 BaoMinh Insurance Corp are associated (or correlated) with FPT Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Securities JSC has no effect on the direction of BaoMinh Insurance i.e., BaoMinh Insurance and FPT Securities go up and down completely randomly.

Pair Corralation between BaoMinh Insurance and FPT Securities

Assuming the 90 days trading horizon BaoMinh Insurance is expected to generate 13.43 times less return on investment than FPT Securities. But when comparing it to its historical volatility, BaoMinh Insurance Corp is 1.59 times less risky than FPT Securities. It trades about 0.01 of its potential returns per unit of risk. FPT Securities JSC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  1,257,798  in FPT Securities JSC on October 24, 2024 and sell it today you would earn a total of  2,827,202  from holding FPT Securities JSC or generate 224.77% return on investment over 90 days.

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

BaoMinh Insurance Corp  vs.  FPT Securities JSC

BaoMinh Insurance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BaoMinh Insurance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, BaoMinh Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

FPT Securities JSC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in FPT Securities JSC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, FPT Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BaoMinh Insurance and FPT Securities

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

The idea behind BaoMinh Insurance Corp and FPT 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.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.