Correlation Between Bao Ngoc and Vietnam JSCmmercial

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

By analyzing existing cross correlation between Bao Ngoc Investment and Vietnam JSCmmercial Bank, you can compare the effects of market volatilities on Bao Ngoc and Vietnam JSCmmercial 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 Bao Ngoc with a short position of Vietnam JSCmmercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bao Ngoc and Vietnam JSCmmercial.

Diversification Opportunities for Bao Ngoc and Vietnam JSCmmercial

-0.6

Correlation Coefficient

Bao Ngoc  Vietnam JSCmmercial

Excellent diversification

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

Pair Corralation between Bao Ngoc and Vietnam JSCmmercial

Assuming the 90 days trading horizon Bao Ngoc Investment is expected to under-perform the Vietnam JSCmmercial. In addition to that, Bao Ngoc is 1.62 times more volatile than Vietnam JSCmmercial Bank. It trades about -0.1 of its total potential returns per unit of risk. Vietnam JSCmmercial Bank is currently generating about 0.18 per unit of volatility. If you would invest  3,615,000  in Vietnam JSCmmercial Bank on December 20, 2024 and sell it today you would earn a total of  540,000  from holding Vietnam JSCmmercial Bank or generate 14.94% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	98.31%
Values	Daily Returns

Bao Ngoc Investment  vs.  Vietnam JSCmmercial Bank

Bao Ngoc Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Bao Ngoc Investment 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 basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Vietnam JSCmmercial Bank

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam JSCmmercial Bank are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Vietnam JSCmmercial displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Bao Ngoc and Vietnam JSCmmercial

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

The idea behind Bao Ngoc Investment and Vietnam JSCmmercial Bank 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.