Correlation Between Foreign Trade and Vu Dang

Can any of the company-specific risk be diversified away by investing in both Foreign Trade and Vu Dang 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 Foreign Trade and Vu Dang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Foreign Trade Development and Vu Dang Investment, you can compare the effects of market volatilities on Foreign Trade and Vu Dang 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 Foreign Trade with a short position of Vu Dang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Trade and Vu Dang.

Diversification Opportunities for Foreign Trade and Vu Dang

0.33

Correlation Coefficient

Foreign Trade  Vu Dang

Weak diversification

The 3 months correlation between Foreign and SVD is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Trade Development and Vu Dang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vu Dang Investment and Foreign Trade 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 Foreign Trade Development are associated (or correlated) with Vu Dang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vu Dang Investment has no effect on the direction of Foreign Trade i.e., Foreign Trade and Vu Dang go up and down completely randomly.

Pair Corralation between Foreign Trade and Vu Dang

Assuming the 90 days trading horizon Foreign Trade Development is expected to generate 1.66 times more return on investment than Vu Dang. However, Foreign Trade is 1.66 times more volatile than Vu Dang Investment. It trades about 0.06 of its potential returns per unit of risk. Vu Dang Investment is currently generating about 0.04 per unit of risk. If you would invest  1,600,000  in Foreign Trade Development on October 24, 2024 and sell it today you would earn a total of  90,000  from holding Foreign Trade Development or generate 5.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	49.21%
Values	Daily Returns

Foreign Trade Development  vs.  Vu Dang Investment

Foreign Trade Development

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Foreign Trade Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating fundamental indicators, Foreign Trade displayed solid returns over the last few months and may actually be approaching a breakup point.

Vu Dang Investment

Risk-Adjusted Performance

3 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vu Dang Investment are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Vu Dang may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Foreign Trade and Vu Dang

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

The idea behind Foreign Trade Development and Vu Dang Investment 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.