Correlation Between FPT Digital and VTC Telecommunicatio
Can any of the company-specific risk be diversified away by investing in both FPT Digital and VTC Telecommunicatio 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 FPT Digital and VTC Telecommunicatio into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FPT Digital Retail and VTC Telecommunications JSC, you can compare the effects of market volatilities on FPT Digital and VTC Telecommunicatio 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 FPT Digital with a short position of VTC Telecommunicatio. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT Digital and VTC Telecommunicatio.
Diversification Opportunities for FPT Digital and VTC Telecommunicatio
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between FPT and VTC is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding FPT Digital Retail and VTC Telecommunications JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTC Telecommunications and FPT Digital 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 FPT Digital Retail are associated (or correlated) with VTC Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTC Telecommunications has no effect on the direction of FPT Digital i.e., FPT Digital and VTC Telecommunicatio go up and down completely randomly.
Pair Corralation between FPT Digital and VTC Telecommunicatio
Assuming the 90 days trading horizon FPT Digital Retail is expected to generate 0.72 times more return on investment than VTC Telecommunicatio. However, FPT Digital Retail is 1.38 times less risky than VTC Telecommunicatio. It trades about 0.43 of its potential returns per unit of risk. VTC Telecommunications JSC is currently generating about -0.04 per unit of risk. If you would invest 16,600,000 in FPT Digital Retail on September 16, 2024 and sell it today you would earn a total of 1,590,000 from holding FPT Digital Retail or generate 9.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 90.91% |
Values | Daily Returns |
FPT Digital Retail vs. VTC Telecommunications JSC
Performance |
Timeline |
FPT Digital Retail |
VTC Telecommunications |
FPT Digital and VTC Telecommunicatio Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with FPT Digital and VTC Telecommunicatio
The main advantage of trading using opposite FPT Digital and VTC Telecommunicatio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FPT Digital position performs unexpectedly, VTC Telecommunicatio 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 VTC Telecommunicatio will offset losses from the drop in VTC Telecommunicatio's long position.FPT Digital vs. Fecon Mining JSC | FPT Digital vs. Innovative Technology Development | FPT Digital vs. Saigon Viendong Technology | FPT Digital vs. Transport and Industry |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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