Correlation Between Vietnam Rubber and Tay Ninh

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

Diversification Opportunities for Vietnam Rubber and Tay Ninh

0.14

Correlation Coefficient

Vietnam Rubber  Tay Ninh

Average diversification

The 3 months correlation between Vietnam and Tay is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Rubber Group and Tay Ninh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tay Ninh Rubber 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 Tay Ninh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tay Ninh Rubber has no effect on the direction of Vietnam Rubber i.e., Vietnam Rubber and Tay Ninh go up and down completely randomly.

Pair Corralation between Vietnam Rubber and Tay Ninh

Assuming the 90 days trading horizon Vietnam Rubber is expected to generate 1.46 times less return on investment than Tay Ninh. In addition to that, Vietnam Rubber is 1.2 times more volatile than Tay Ninh Rubber. It trades about 0.08 of its total potential returns per unit of risk. Tay Ninh Rubber is currently generating about 0.14 per unit of volatility. If you would invest  2,502,400  in Tay Ninh Rubber on December 2, 2024 and sell it today you would earn a total of  5,897,600  from holding Tay Ninh Rubber or generate 235.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	91.08%
Values	Daily Returns

Vietnam Rubber Group  vs.  Tay Ninh Rubber

Vietnam Rubber Group

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Rubber Group are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Rubber may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Tay Ninh Rubber

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tay Ninh Rubber are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Tay Ninh displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vietnam Rubber and Tay Ninh

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

The idea behind Vietnam Rubber Group and Tay Ninh Rubber 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.