Correlation Between BaoMinh Insurance and Vietnam Maritime

Can any of the company-specific risk be diversified away by investing in both BaoMinh Insurance and Vietnam Maritime 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 Vietnam Maritime 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 Vietnam Maritime Development, you can compare the effects of market volatilities on BaoMinh Insurance and Vietnam Maritime 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 Vietnam Maritime. Check out your portfolio center. Please also check ongoing floating volatility patterns of BaoMinh Insurance and Vietnam Maritime.

Diversification Opportunities for BaoMinh Insurance and Vietnam Maritime

-0.14

Correlation Coefficient

BaoMinh Insurance  Vietnam Maritime

Good diversification

The 3 months correlation between BaoMinh and Vietnam is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding BaoMinh Insurance Corp and Vietnam Maritime Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Maritime Dev 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 Vietnam Maritime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Maritime Dev has no effect on the direction of BaoMinh Insurance i.e., BaoMinh Insurance and Vietnam Maritime go up and down completely randomly.

Pair Corralation between BaoMinh Insurance and Vietnam Maritime

Assuming the 90 days trading horizon BaoMinh Insurance Corp is expected to under-perform the Vietnam Maritime. But the stock apears to be less risky and, when comparing its historical volatility, BaoMinh Insurance Corp is 5.23 times less risky than Vietnam Maritime. The stock trades about -0.11 of its potential returns per unit of risk. The Vietnam Maritime Development is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  1,820,000  in Vietnam Maritime Development on October 11, 2024 and sell it today you would earn a total of  530,000  from holding Vietnam Maritime Development or generate 29.12% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.91%
Values	Daily Returns

BaoMinh Insurance Corp  vs.  Vietnam Maritime Development

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.

Vietnam Maritime Dev

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Maritime Development are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Maritime displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BaoMinh Insurance and Vietnam Maritime

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

The idea behind BaoMinh Insurance Corp and Vietnam Maritime Development 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 Transaction History module to view history of all your transactions and understand their impact on performance.