Correlation Between Hai An and Techcom Vietnam

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

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

Diversification Opportunities for Hai An and Techcom Vietnam

-0.68

Correlation Coefficient

Hai An  Techcom Vietnam

Excellent diversification

The 3 months correlation between Hai and Techcom is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and Techcom Vietnam REIT in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Techcom Vietnam REIT and Hai An 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 Hai An Transport are associated (or correlated) with Techcom Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Techcom Vietnam REIT has no effect on the direction of Hai An i.e., Hai An and Techcom Vietnam go up and down completely randomly.

Pair Corralation between Hai An and Techcom Vietnam

Assuming the 90 days trading horizon Hai An is expected to generate 9.3 times less return on investment than Techcom Vietnam. But when comparing it to its historical volatility, Hai An Transport is 1.13 times less risky than Techcom Vietnam. It trades about 0.04 of its potential returns per unit of risk. Techcom Vietnam REIT is currently generating about 0.37 of returns per unit of risk over similar time horizon. If you would invest  479,000  in Techcom Vietnam REIT on December 5, 2024 and sell it today you would earn a total of  66,000  from holding Techcom Vietnam REIT or generate 13.78% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	86.36%
Values	Daily Returns

Hai An Transport  vs.  Techcom Vietnam REIT

Hai An Transport

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hai An Transport are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical indicators, Hai An is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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 fairly strong basic indicators, Techcom Vietnam is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Hai An and Techcom Vietnam

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

The idea behind Hai An Transport and Techcom Vietnam REIT 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.