Correlation Between Ba Ria and Viet Nam

Can any of the company-specific risk be diversified away by investing in both Ba Ria and Viet Nam 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 Viet Nam 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 Viet Nam Construction, you can compare the effects of market volatilities on Ba Ria and Viet Nam 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 Viet Nam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ba Ria and Viet Nam.

Diversification Opportunities for Ba Ria and Viet Nam

-0.29

Correlation Coefficient

Ba Ria  Viet Nam

Very good diversification

The 3 months correlation between BTP and Viet is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Ba Ria Thermal and Viet Nam Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viet Nam Construction 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 Viet Nam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viet Nam Construction has no effect on the direction of Ba Ria i.e., Ba Ria and Viet Nam go up and down completely randomly.

Pair Corralation between Ba Ria and Viet Nam

Assuming the 90 days trading horizon Ba Ria Thermal is expected to under-perform the Viet Nam. But the stock apears to be less risky and, when comparing its historical volatility, Ba Ria Thermal is 2.76 times less risky than Viet Nam. The stock trades about -0.06 of its potential returns per unit of risk. The Viet Nam Construction is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,200,000  in Viet Nam Construction on October 6, 2024 and sell it today you would earn a total of  20,000  from holding Viet Nam Construction or generate 1.67% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	53.49%
Values	Daily Returns

Ba Ria Thermal  vs.  Viet Nam Construction

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 unfluctuating 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.

Viet Nam Construction

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viet Nam Construction are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Viet Nam displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Ba Ria and Viet Nam

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

The idea behind Ba Ria Thermal and Viet Nam Construction 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.