Correlation Between Ba Ria and Vietnam Airlines

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

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

Diversification Opportunities for Ba Ria and Vietnam Airlines

-0.79

Correlation Coefficient

Ba Ria  Vietnam Airlines

Pay attention - limited upside

The 3 months correlation between BTP and Vietnam is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Ba Ria Thermal 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 Ba Ria 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 Ba Ria Thermal 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 Ba Ria i.e., Ba Ria and Vietnam Airlines go up and down completely randomly.

Pair Corralation between Ba Ria and Vietnam Airlines

Assuming the 90 days trading horizon Ba Ria Thermal is expected to under-perform the Vietnam Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Ba Ria Thermal is 3.39 times less risky than Vietnam Airlines. The stock trades about -0.16 of its potential returns per unit of risk. The Vietnam Airlines JSC is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest  2,035,000  in Vietnam Airlines JSC on October 4, 2024 and sell it today you would earn a total of  885,000  from holding Vietnam Airlines JSC or generate 43.49% return on investment over 90 days.

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

Ba Ria Thermal  vs.  Vietnam Airlines JSC

Ba Ria Thermal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ba Ria Thermal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak 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.

Vietnam Airlines JSC

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Airlines JSC are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Airlines displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ba Ria and Vietnam Airlines

The main advantage of trading using opposite Ba Ria and Vietnam Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ba Ria 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 Ba Ria Thermal 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.

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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.