Correlation Between FPT Securities and Vnsteel Vicasa

Can any of the company-specific risk be diversified away by investing in both FPT Securities and Vnsteel Vicasa 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 Vnsteel Vicasa 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 Vnsteel Vicasa JSC, you can compare the effects of market volatilities on FPT Securities and Vnsteel Vicasa 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 Vnsteel Vicasa. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT Securities and Vnsteel Vicasa.

Diversification Opportunities for FPT Securities and Vnsteel Vicasa

0.68

Correlation Coefficient

FPT Securities  Vnsteel Vicasa

Poor diversification

The 3 months correlation between FPT and Vnsteel is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding FPT Securities JSC and Vnsteel Vicasa JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vnsteel Vicasa JSC 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 Vnsteel Vicasa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vnsteel Vicasa JSC has no effect on the direction of FPT Securities i.e., FPT Securities and Vnsteel Vicasa go up and down completely randomly.

Pair Corralation between FPT Securities and Vnsteel Vicasa

Assuming the 90 days trading horizon FPT Securities JSC is expected to generate 0.6 times more return on investment than Vnsteel Vicasa. However, FPT Securities JSC is 1.66 times less risky than Vnsteel Vicasa. It trades about 0.17 of its potential returns per unit of risk. Vnsteel Vicasa JSC is currently generating about -0.06 per unit of risk. If you would invest  4,260,000  in FPT Securities JSC on December 20, 2024 and sell it today you would earn a total of  780,000  from holding FPT Securities JSC or generate 18.31% return on investment over 90 days.

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

FPT Securities JSC  vs.  Vnsteel Vicasa JSC

FPT Securities JSC

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FPT Securities JSC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FPT Securities displayed solid returns over the last few months and may actually be approaching a breakup point.

Vnsteel Vicasa JSC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vnsteel Vicasa JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with FPT Securities and Vnsteel Vicasa

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

The idea behind FPT Securities JSC and Vnsteel Vicasa 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.