Correlation Between Downing Strategic and VinaCapital Vietnam

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

By analyzing existing cross correlation between Downing Strategic Micro Cap and VinaCapital Vietnam Opportunity, you can compare the effects of market volatilities on Downing Strategic and VinaCapital Vietnam 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 Downing Strategic with a short position of VinaCapital Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Downing Strategic and VinaCapital Vietnam.

Diversification Opportunities for Downing Strategic and VinaCapital Vietnam

-0.21

Correlation Coefficient

Downing Strategic  VinaCapital Vietnam

Very good diversification

The 3 months correlation between Downing and VinaCapital is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Downing Strategic Micro Cap and VinaCapital Vietnam Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VinaCapital Vietnam and Downing Strategic 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 Downing Strategic Micro Cap are associated (or correlated) with VinaCapital Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VinaCapital Vietnam has no effect on the direction of Downing Strategic i.e., Downing Strategic and VinaCapital Vietnam go up and down completely randomly.

Pair Corralation between Downing Strategic and VinaCapital Vietnam

Assuming the 90 days trading horizon Downing Strategic Micro Cap is expected to generate 5.16 times more return on investment than VinaCapital Vietnam. However, Downing Strategic is 5.16 times more volatile than VinaCapital Vietnam Opportunity. It trades about 0.05 of its potential returns per unit of risk. VinaCapital Vietnam Opportunity is currently generating about 0.05 per unit of risk. If you would invest  370.00  in Downing Strategic Micro Cap on December 3, 2024 and sell it today you would earn a total of  35.00  from holding Downing Strategic Micro Cap or generate 9.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Downing Strategic Micro Cap  vs.  VinaCapital Vietnam Opportunit

Downing Strategic Micro

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Downing Strategic Micro Cap are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Downing Strategic exhibited solid returns over the last few months and may actually be approaching a breakup point.

VinaCapital Vietnam

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VinaCapital Vietnam Opportunity are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound technical and fundamental indicators, VinaCapital Vietnam is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Downing Strategic and VinaCapital Vietnam

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

The idea behind Downing Strategic Micro Cap and VinaCapital Vietnam Opportunity 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..