Correlation Between Ha Noi and FPT Corp

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

Diversification Opportunities for Ha Noi and FPT Corp

-0.82

Correlation Coefficient

Ha Noi  FPT Corp

Pay attention - limited upside

The 3 months correlation between EID and FPT is -0.82. Overlapping area represents the amount of risk that can be diversified away by holding Ha Noi Education and FPT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Corp 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 FPT Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Corp has no effect on the direction of Ha Noi i.e., Ha Noi and FPT Corp go up and down completely randomly.

Pair Corralation between Ha Noi and FPT Corp

Assuming the 90 days trading horizon Ha Noi is expected to generate 1.53 times less return on investment than FPT Corp. But when comparing it to its historical volatility, Ha Noi Education is 1.29 times less risky than FPT Corp. It trades about 0.11 of its potential returns per unit of risk. FPT Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest  9,409,220  in FPT Corp on October 9, 2024 and sell it today you would earn a total of  5,600,780  from holding FPT Corp or generate 59.52% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	97.14%
Values	Daily Returns

Ha Noi Education  vs.  FPT Corp

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.

FPT Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in FPT Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FPT Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ha Noi and FPT Corp

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

The idea behind Ha Noi Education and FPT Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.