Correlation Between SSIAM VNFIN and SSIAM VN30

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

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

Diversification Opportunities for SSIAM VNFIN and SSIAM VN30

0.81

Correlation Coefficient

SSIAM VNFIN  SSIAM VN30

Very poor diversification

The 3 months correlation between SSIAM and SSIAM is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding SSIAM VNFIN LEAD and SSIAM VN30 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIAM VN30 ETF and SSIAM VNFIN 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 VNFIN LEAD are associated (or correlated) with SSIAM VN30. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIAM VN30 ETF has no effect on the direction of SSIAM VNFIN i.e., SSIAM VNFIN and SSIAM VN30 go up and down completely randomly.

Pair Corralation between SSIAM VNFIN and SSIAM VN30

Assuming the 90 days trading horizon SSIAM VNFIN LEAD is expected to generate 1.03 times more return on investment than SSIAM VN30. However, SSIAM VNFIN is 1.03 times more volatile than SSIAM VN30 ETF. It trades about 0.06 of its potential returns per unit of risk. SSIAM VN30 ETF is currently generating about 0.04 per unit of risk. If you would invest  1,564,000  in SSIAM VNFIN LEAD on October 25, 2024 and sell it today you would earn a total of  616,000  from holding SSIAM VNFIN LEAD or generate 39.39% return on investment over 90 days.

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

SSIAM VNFIN LEAD  vs.  SSIAM VN30 ETF

SSIAM VNFIN LEAD

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SSIAM VNFIN LEAD are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SSIAM VNFIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

SSIAM VN30 ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSIAM VN30 ETF has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with SSIAM VNFIN and SSIAM VN30

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

The idea behind SSIAM VNFIN LEAD and SSIAM VN30 ETF 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.