Correlation Between SSIAM VN30 and SSIAM VNFIN

Can any of the company-specific risk be diversified away by investing in both SSIAM VN30 and SSIAM VNFIN 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 SSIAM VN30 and SSIAM VNFIN into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between SSIAM VN30 ETF and SSIAM VNFIN LEAD, you can compare the effects of market volatilities on SSIAM VN30 and SSIAM VNFIN 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 SSIAM VN30 with a short position of SSIAM VNFIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of SSIAM VN30 and SSIAM VNFIN.

Diversification Opportunities for SSIAM VN30 and SSIAM VNFIN

0.93

Correlation Coefficient

SSIAM VN30  SSIAM VNFIN

Almost no diversification

The 3 months correlation between SSIAM and SSIAM is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding SSIAM VN30 ETF and SSIAM VNFIN LEAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIAM VNFIN LEAD and SSIAM VN30 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 SSIAM VN30 ETF are associated (or correlated) with SSIAM VNFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIAM VNFIN LEAD has no effect on the direction of SSIAM VN30 i.e., SSIAM VN30 and SSIAM VNFIN go up and down completely randomly.

Pair Corralation between SSIAM VN30 and SSIAM VNFIN

Assuming the 90 days trading horizon SSIAM VN30 is expected to generate 3.08 times less return on investment than SSIAM VNFIN. But when comparing it to its historical volatility, SSIAM VN30 ETF is 1.31 times less risky than SSIAM VNFIN. It trades about 0.07 of its potential returns per unit of risk. SSIAM VNFIN LEAD is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest  2,170,000  in SSIAM VNFIN LEAD on December 25, 2024 and sell it today you would earn a total of  180,000  from holding SSIAM VNFIN LEAD or generate 8.29% return on investment over 90 days.

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

SSIAM VN30 ETF  vs.  SSIAM VNFIN LEAD

SSIAM VN30 ETF

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in SSIAM VN30 ETF are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, SSIAM VN30 is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

SSIAM VNFIN LEAD

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SSIAM VNFIN LEAD are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, SSIAM VNFIN may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with SSIAM VN30 and SSIAM VNFIN

The main advantage of trading using opposite SSIAM VN30 and SSIAM VNFIN positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SSIAM VN30 position performs unexpectedly, SSIAM VNFIN 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 SSIAM VNFIN will offset losses from the drop in SSIAM VNFIN's long position.

The idea behind SSIAM VN30 ETF and SSIAM VNFIN LEAD 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.