Correlation Between Vietnam Rubber and FPT Securities

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

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

Diversification Opportunities for Vietnam Rubber and FPT Securities

0.34

Correlation Coefficient

Vietnam Rubber  FPT Securities

Weak diversification

The 3 months correlation between Vietnam and FPT is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Rubber Group and FPT Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Securities JSC and Vietnam Rubber 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 Vietnam Rubber Group are associated (or correlated) with FPT Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Securities JSC has no effect on the direction of Vietnam Rubber i.e., Vietnam Rubber and FPT Securities go up and down completely randomly.

Pair Corralation between Vietnam Rubber and FPT Securities

Assuming the 90 days trading horizon Vietnam Rubber Group is expected to generate 0.65 times more return on investment than FPT Securities. However, Vietnam Rubber Group is 1.54 times less risky than FPT Securities. It trades about -0.42 of its potential returns per unit of risk. FPT Securities JSC is currently generating about -0.31 per unit of risk. If you would invest  3,210,000  in Vietnam Rubber Group on October 8, 2024 and sell it today you would lose (180,000) from holding Vietnam Rubber Group or give up 5.61% of portfolio value over 90 days.

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

Vietnam Rubber Group  vs.  FPT Securities JSC

Vietnam Rubber Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vietnam Rubber Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

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 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 Vietnam Rubber and FPT Securities

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

The idea behind Vietnam Rubber Group and FPT Securities 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.