Correlation Between FIT INVEST and Hanoi Plastics

Can any of the company-specific risk be diversified away by investing in both FIT INVEST and Hanoi Plastics 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 FIT INVEST and Hanoi Plastics into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FIT INVEST JSC and Hanoi Plastics JSC, you can compare the effects of market volatilities on FIT INVEST and Hanoi Plastics 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 FIT INVEST with a short position of Hanoi Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of FIT INVEST and Hanoi Plastics.

Diversification Opportunities for FIT INVEST and Hanoi Plastics

0.47

Correlation Coefficient

FIT INVEST  Hanoi Plastics

Very weak diversification

The 3 months correlation between FIT and Hanoi is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding FIT INVEST JSC and Hanoi Plastics JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Plastics JSC and FIT INVEST 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 FIT INVEST JSC are associated (or correlated) with Hanoi Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Plastics JSC has no effect on the direction of FIT INVEST i.e., FIT INVEST and Hanoi Plastics go up and down completely randomly.

Pair Corralation between FIT INVEST and Hanoi Plastics

Assuming the 90 days trading horizon FIT INVEST JSC is expected to generate 0.88 times more return on investment than Hanoi Plastics. However, FIT INVEST JSC is 1.13 times less risky than Hanoi Plastics. It trades about 0.14 of its potential returns per unit of risk. Hanoi Plastics JSC is currently generating about 0.02 per unit of risk. If you would invest  421,000  in FIT INVEST JSC on December 29, 2024 and sell it today you would earn a total of  44,000  from holding FIT INVEST JSC or generate 10.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

FIT INVEST JSC  vs.  Hanoi Plastics JSC

FIT INVEST JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FIT INVEST JSC are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FIT INVEST may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Hanoi Plastics JSC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hanoi Plastics JSC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Hanoi Plastics is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FIT INVEST and Hanoi Plastics

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

The idea behind FIT INVEST JSC and Hanoi Plastics 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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.