Correlation Between FIT INVEST and Tin Nghia

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

Diversification Opportunities for FIT INVEST and Tin Nghia

0.63

Correlation Coefficient

FIT INVEST  Tin Nghia

Poor diversification

The 3 months correlation between FIT and Tin is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding FIT INVEST JSC and Tin Nghia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tin Nghia Industrial 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 Tin Nghia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tin Nghia Industrial has no effect on the direction of FIT INVEST i.e., FIT INVEST and Tin Nghia go up and down completely randomly.

Pair Corralation between FIT INVEST and Tin Nghia

Assuming the 90 days trading horizon FIT INVEST is expected to generate 5.01 times less return on investment than Tin Nghia. But when comparing it to its historical volatility, FIT INVEST JSC is 1.34 times less risky than Tin Nghia. It trades about 0.01 of its potential returns per unit of risk. Tin Nghia Industrial is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  2,135,000  in Tin Nghia Industrial on December 27, 2024 and sell it today you would earn a total of  65,000  from holding Tin Nghia Industrial or generate 3.04% return on investment over 90 days.

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

FIT INVEST JSC  vs.  Tin Nghia Industrial

FIT INVEST JSC

Risk-Adjusted Performance

Weak

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

Tin Nghia Industrial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tin Nghia Industrial are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Tin Nghia 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 Tin Nghia

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

The idea behind FIT INVEST JSC and Tin Nghia Industrial 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.