Correlation Between Ha Noi and VietinBank Securities

Can any of the company-specific risk be diversified away by investing in both Ha Noi and VietinBank Securities 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 Ha Noi and VietinBank Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Ha Noi Education and VietinBank Securities JSC, you can compare the effects of market volatilities on Ha Noi and VietinBank Securities 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 Ha Noi with a short position of VietinBank Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ha Noi and VietinBank Securities.

Diversification Opportunities for Ha Noi and VietinBank Securities

0.61

Correlation Coefficient

Ha Noi  VietinBank Securities

Poor diversification

The 3 months correlation between EID and VietinBank is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ha Noi Education and VietinBank Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VietinBank Securities JSC and Ha Noi 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 Ha Noi Education are associated (or correlated) with VietinBank Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VietinBank Securities JSC has no effect on the direction of Ha Noi i.e., Ha Noi and VietinBank Securities go up and down completely randomly.

Pair Corralation between Ha Noi and VietinBank Securities

Assuming the 90 days trading horizon Ha Noi Education is expected to under-perform the VietinBank Securities. But the stock apears to be less risky and, when comparing its historical volatility, Ha Noi Education is 1.95 times less risky than VietinBank Securities. The stock trades about -0.14 of its potential returns per unit of risk. The VietinBank Securities JSC is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  3,445,000  in VietinBank Securities JSC on September 20, 2024 and sell it today you would earn a total of  160,000  from holding VietinBank Securities JSC or generate 4.64% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Ha Noi Education  vs.  VietinBank Securities JSC

Ha Noi Education

Risk-Adjusted Performance

0 of 100

Very Weak

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

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.

Pair Trading with Ha Noi and VietinBank Securities

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

The idea behind Ha Noi Education and VietinBank Securities 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.