Correlation Between VietinBank Securities and LDG Investment

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Can any of the company-specific risk be diversified away by investing in both VietinBank Securities and LDG Investment 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 VietinBank Securities and LDG Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VietinBank Securities JSC and LDG Investment JSC, you can compare the effects of market volatilities on VietinBank Securities and LDG Investment 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 VietinBank Securities with a short position of LDG Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of VietinBank Securities and LDG Investment.

Diversification Opportunities for VietinBank Securities and LDG Investment

0.62
  Correlation Coefficient

Poor diversification

The 3 months correlation between VietinBank and LDG is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding VietinBank Securities JSC and LDG Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LDG Investment JSC and VietinBank Securities 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 VietinBank Securities JSC are associated (or correlated) with LDG Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LDG Investment JSC has no effect on the direction of VietinBank Securities i.e., VietinBank Securities and LDG Investment go up and down completely randomly.

Pair Corralation between VietinBank Securities and LDG Investment

Assuming the 90 days trading horizon VietinBank Securities is expected to generate 1.58 times less return on investment than LDG Investment. But when comparing it to its historical volatility, VietinBank Securities JSC is 1.1 times less risky than LDG Investment. It trades about 0.03 of its potential returns per unit of risk. LDG Investment JSC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  185,000  in LDG Investment JSC on September 25, 2024 and sell it today you would earn a total of  3,000  from holding LDG Investment JSC or generate 1.62% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.45%
ValuesDaily Returns

VietinBank Securities JSC  vs.  LDG Investment JSC

 Performance 
       Timeline  
VietinBank Securities JSC 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days VietinBank Securities JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.
LDG Investment JSC 

Risk-Adjusted Performance

0 of 100

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

VietinBank Securities and LDG Investment Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VietinBank Securities and LDG Investment

The main advantage of trading using opposite VietinBank Securities and LDG Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VietinBank Securities position performs unexpectedly, LDG Investment 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 LDG Investment will offset losses from the drop in LDG Investment's long position.
The idea behind VietinBank Securities JSC and LDG Investment 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.

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