Correlation Between Ben Thanh and Vietnam Airlines

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

By analyzing existing cross correlation between Ben Thanh Rubber and Vietnam Airlines JSC, you can compare the effects of market volatilities on Ben Thanh and Vietnam Airlines 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 Ben Thanh with a short position of Vietnam Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ben Thanh and Vietnam Airlines.

Diversification Opportunities for Ben Thanh and Vietnam Airlines

-0.23

Correlation Coefficient

Ben Thanh  Vietnam Airlines

Very good diversification

The 3 months correlation between Ben and Vietnam is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Ben Thanh Rubber and Vietnam Airlines JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Airlines JSC and Ben Thanh 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 Ben Thanh Rubber are associated (or correlated) with Vietnam Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Airlines JSC has no effect on the direction of Ben Thanh i.e., Ben Thanh and Vietnam Airlines go up and down completely randomly.

Pair Corralation between Ben Thanh and Vietnam Airlines

Assuming the 90 days trading horizon Ben Thanh Rubber is expected to generate 0.49 times more return on investment than Vietnam Airlines. However, Ben Thanh Rubber is 2.03 times less risky than Vietnam Airlines. It trades about 0.05 of its potential returns per unit of risk. Vietnam Airlines JSC is currently generating about -0.01 per unit of risk. If you would invest  1,390,000  in Ben Thanh Rubber on December 20, 2024 and sell it today you would earn a total of  35,000  from holding Ben Thanh Rubber or generate 2.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.28%
Values	Daily Returns

Ben Thanh Rubber  vs.  Vietnam Airlines JSC

Ben Thanh Rubber

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Ben Thanh Rubber are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Ben Thanh is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Vietnam Airlines JSC

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Ben Thanh and Vietnam Airlines

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

The idea behind Ben Thanh Rubber and Vietnam Airlines 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.