Correlation Between Techcom Vietnam and Long An

Can any of the company-specific risk be diversified away by investing in both Techcom Vietnam and Long An 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 Techcom Vietnam and Long An into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Techcom Vietnam REIT and Long An Food, you can compare the effects of market volatilities on Techcom Vietnam and Long An 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 Techcom Vietnam with a short position of Long An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Techcom Vietnam and Long An.

Diversification Opportunities for Techcom Vietnam and Long An

-0.18

Correlation Coefficient

Techcom Vietnam  Long An

Good diversification

The 3 months correlation between Techcom and Long is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Techcom Vietnam REIT and Long An Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Long An Food and Techcom Vietnam 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 Techcom Vietnam REIT are associated (or correlated) with Long An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Long An Food has no effect on the direction of Techcom Vietnam i.e., Techcom Vietnam and Long An go up and down completely randomly.

Pair Corralation between Techcom Vietnam and Long An

Assuming the 90 days trading horizon Techcom Vietnam REIT is expected to under-perform the Long An. In addition to that, Techcom Vietnam is 1.29 times more volatile than Long An Food. It trades about -0.04 of its total potential returns per unit of risk. Long An Food is currently generating about 0.12 per unit of volatility. If you would invest  1,654,797  in Long An Food on December 22, 2024 and sell it today you would earn a total of  245,203  from holding Long An Food or generate 14.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	85.96%
Values	Daily Returns

Techcom Vietnam REIT  vs.  Long An Food

Techcom Vietnam REIT

Risk-Adjusted Performance

Very Weak

Over the last 90 days Techcom Vietnam REIT has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Long An Food

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Long An Food are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Long An displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Techcom Vietnam and Long An

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

The idea behind Techcom Vietnam REIT and Long An Food 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.

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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.