Correlation Between VietinBank Securities and Vietnam Dairy

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

Diversification Opportunities for VietinBank Securities and Vietnam Dairy

0.84

Correlation Coefficient

VietinBank Securities  Vietnam Dairy

Very poor diversification

The 3 months correlation between VietinBank and Vietnam is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding VietinBank Securities JSC and Vietnam Dairy Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Dairy Products 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 Vietnam Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Dairy Products has no effect on the direction of VietinBank Securities i.e., VietinBank Securities and Vietnam Dairy go up and down completely randomly.

Pair Corralation between VietinBank Securities and Vietnam Dairy

Assuming the 90 days trading horizon VietinBank Securities JSC is expected to generate 2.46 times more return on investment than Vietnam Dairy. However, VietinBank Securities is 2.46 times more volatile than Vietnam Dairy Products. It trades about 0.08 of its potential returns per unit of risk. Vietnam Dairy Products is currently generating about -0.02 per unit of risk. If you would invest  1,360,000  in VietinBank Securities JSC on October 27, 2024 and sell it today you would earn a total of  2,000,000  from holding VietinBank Securities JSC or generate 147.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

VietinBank Securities JSC  vs.  Vietnam Dairy Products

VietinBank Securities JSC

Risk-Adjusted Performance

0 of 100

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 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.

Vietnam Dairy Products

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vietnam Dairy Products has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's primary indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with VietinBank Securities and Vietnam Dairy

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

The idea behind VietinBank Securities JSC and Vietnam Dairy Products 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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.