Correlation Between Vietnam JSCmmercial and Book

Can any of the company-specific risk be diversified away by investing in both Vietnam JSCmmercial and Book 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 Book 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 Book And Educational, you can compare the effects of market volatilities on Vietnam JSCmmercial and Book 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 Book. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam JSCmmercial and Book.

Diversification Opportunities for Vietnam JSCmmercial and Book

0.1

Correlation Coefficient

Vietnam JSCmmercial  Book

Average diversification

The 3 months correlation between Vietnam and Book is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam JSCmmercial Bank and Book And Educational in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Book And Educational 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 Book. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Book And Educational has no effect on the direction of Vietnam JSCmmercial i.e., Vietnam JSCmmercial and Book go up and down completely randomly.

Pair Corralation between Vietnam JSCmmercial and Book

Assuming the 90 days trading horizon Vietnam JSCmmercial is expected to generate 1.84 times less return on investment than Book. But when comparing it to its historical volatility, Vietnam JSCmmercial Bank is 2.31 times less risky than Book. It trades about 0.05 of its potential returns per unit of risk. Book And Educational is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,336,561  in Book And Educational on September 20, 2024 and sell it today you would earn a total of  363,439  from holding Book And Educational or generate 27.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	52.34%
Values	Daily Returns

Vietnam JSCmmercial Bank  vs.  Book And Educational

Vietnam JSCmmercial Bank

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam JSCmmercial Bank are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Vietnam JSCmmercial is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Book And Educational

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vietnam JSCmmercial and Book

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

The idea behind Vietnam JSCmmercial Bank and Book And Educational 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.