Correlation Between FPT Securities and Vina2 Investment

Can any of the company-specific risk be diversified away by investing in both FPT Securities and Vina2 Investment 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 Securities and Vina2 Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FPT Securities JSC and Vina2 Investment and, you can compare the effects of market volatilities on FPT Securities and Vina2 Investment 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 Securities with a short position of Vina2 Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT Securities and Vina2 Investment.

Diversification Opportunities for FPT Securities and Vina2 Investment

0.55

Correlation Coefficient

FPT Securities  Vina2 Investment

Very weak diversification

The 3 months correlation between FPT and Vina2 is 0.55. Overlapping area represents the amount of risk that can be diversified away by holding FPT Securities JSC and Vina2 Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vina2 Investment and FPT Securities 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 Securities JSC are associated (or correlated) with Vina2 Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vina2 Investment has no effect on the direction of FPT Securities i.e., FPT Securities and Vina2 Investment go up and down completely randomly.

Pair Corralation between FPT Securities and Vina2 Investment

Assuming the 90 days trading horizon FPT Securities JSC is expected to generate 1.01 times more return on investment than Vina2 Investment. However, FPT Securities is 1.01 times more volatile than Vina2 Investment and. It trades about -0.11 of its potential returns per unit of risk. Vina2 Investment and is currently generating about -0.56 per unit of risk. If you would invest  4,285,000  in FPT Securities JSC on October 26, 2024 and sell it today you would lose (145,000) from holding FPT Securities JSC or give up 3.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	95.45%
Values	Daily Returns

FPT Securities JSC  vs.  Vina2 Investment and

FPT Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Vina2 Investment

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Vina2 Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vina2 Investment is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with FPT Securities and Vina2 Investment

The main advantage of trading using opposite FPT Securities and Vina2 Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FPT Securities position performs unexpectedly, Vina2 Investment 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 Vina2 Investment will offset losses from the drop in Vina2 Investment's long position.

The idea behind FPT Securities JSC and Vina2 Investment and 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.