Correlation Between Fecon Mining and Viet Nam

Can any of the company-specific risk be diversified away by investing in both Fecon Mining and Viet Nam 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 Fecon Mining and Viet Nam into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Fecon Mining JSC and Viet Nam Construction, you can compare the effects of market volatilities on Fecon Mining and Viet Nam 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 Fecon Mining with a short position of Viet Nam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fecon Mining and Viet Nam.

Diversification Opportunities for Fecon Mining and Viet Nam

0.21

Correlation Coefficient

Fecon Mining  Viet Nam

Modest diversification

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

Pair Corralation between Fecon Mining and Viet Nam

Assuming the 90 days trading horizon Fecon Mining JSC is expected to generate 1.38 times more return on investment than Viet Nam. However, Fecon Mining is 1.38 times more volatile than Viet Nam Construction. It trades about 0.15 of its potential returns per unit of risk. Viet Nam Construction is currently generating about 0.0 per unit of risk. If you would invest  308,000  in Fecon Mining JSC on December 20, 2024 and sell it today you would earn a total of  103,000  from holding Fecon Mining JSC or generate 33.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	55.17%
Values	Daily Returns

Fecon Mining JSC  vs.  Viet Nam Construction

Fecon Mining JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fecon Mining JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating primary indicators, Fecon Mining displayed solid returns over the last few months and may actually be approaching a breakup point.

Viet Nam Construction

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Fecon Mining and Viet Nam

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

The idea behind Fecon Mining JSC and Viet Nam Construction 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.