Correlation Between CMC Investment and Vietnam Technological

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

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

Diversification Opportunities for CMC Investment and Vietnam Technological

0.27

Correlation Coefficient

CMC Investment  Vietnam Technological

Modest diversification

The 3 months correlation between CMC and Vietnam is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding CMC Investment JSC and Vietnam Technological And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Technological And and CMC Investment 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 CMC Investment JSC are associated (or correlated) with Vietnam Technological. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Technological And has no effect on the direction of CMC Investment i.e., CMC Investment and Vietnam Technological go up and down completely randomly.

Pair Corralation between CMC Investment and Vietnam Technological

Assuming the 90 days trading horizon CMC Investment JSC is expected to generate 1.05 times more return on investment than Vietnam Technological. However, CMC Investment is 1.05 times more volatile than Vietnam Technological And. It trades about 0.04 of its potential returns per unit of risk. Vietnam Technological And is currently generating about 0.04 per unit of risk. If you would invest  500,000  in CMC Investment JSC on October 11, 2024 and sell it today you would earn a total of  170,000  from holding CMC Investment JSC or generate 34.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	69.04%
Values	Daily Returns

CMC Investment JSC  vs.  Vietnam Technological And

CMC Investment JSC

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CMC Investment JSC are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, CMC Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Vietnam Technological And

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with CMC Investment and Vietnam Technological

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

The idea behind CMC Investment JSC and Vietnam Technological And 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.