Correlation Between Vietnam JSCmmercial and Da Nang

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

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

Diversification Opportunities for Vietnam JSCmmercial and Da Nang

0.58

Correlation Coefficient

Vietnam JSCmmercial  Da Nang

Very weak diversification

The 3 months correlation between Vietnam and DXV is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam JSCmmercial Bank and Da Nang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Nang Construction and Vietnam JSCmmercial 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 Vietnam JSCmmercial Bank are associated (or correlated) with Da Nang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Nang Construction has no effect on the direction of Vietnam JSCmmercial i.e., Vietnam JSCmmercial and Da Nang go up and down completely randomly.

Pair Corralation between Vietnam JSCmmercial and Da Nang

Assuming the 90 days trading horizon Vietnam JSCmmercial Bank is expected to generate 0.49 times more return on investment than Da Nang. However, Vietnam JSCmmercial Bank is 2.06 times less risky than Da Nang. It trades about 0.18 of its potential returns per unit of risk. Da Nang Construction is currently generating about 0.04 per unit of risk. If you would invest  3,625,000  in Vietnam JSCmmercial Bank on December 21, 2024 and sell it today you would earn a total of  535,000  from holding Vietnam JSCmmercial Bank or generate 14.76% return on investment over 90 days.

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

Vietnam JSCmmercial Bank  vs.  Da Nang Construction

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.

Da Nang Construction

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Da Nang Construction are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Da Nang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vietnam JSCmmercial and Da Nang

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

The idea behind Vietnam JSCmmercial Bank and Da Nang 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.