Correlation Between Hochiminh City and SSIAM VNX50

Can any of the company-specific risk be diversified away by investing in both Hochiminh City and SSIAM VNX50 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 Hochiminh City and SSIAM VNX50 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Hochiminh City Metal and SSIAM VNX50 ETF, you can compare the effects of market volatilities on Hochiminh City and SSIAM VNX50 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 Hochiminh City with a short position of SSIAM VNX50. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and SSIAM VNX50.

Diversification Opportunities for Hochiminh City and SSIAM VNX50

0.2

Correlation Coefficient

Hochiminh City  SSIAM VNX50

Modest diversification

The 3 months correlation between Hochiminh and SSIAM is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and SSIAM VNX50 ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIAM VNX50 ETF and Hochiminh City 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 Hochiminh City Metal are associated (or correlated) with SSIAM VNX50. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIAM VNX50 ETF has no effect on the direction of Hochiminh City i.e., Hochiminh City and SSIAM VNX50 go up and down completely randomly.

Pair Corralation between Hochiminh City and SSIAM VNX50

Assuming the 90 days trading horizon Hochiminh City is expected to generate 1.38 times less return on investment than SSIAM VNX50. But when comparing it to its historical volatility, Hochiminh City Metal is 1.17 times less risky than SSIAM VNX50. It trades about 0.03 of its potential returns per unit of risk. SSIAM VNX50 ETF is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,574,000  in SSIAM VNX50 ETF on October 10, 2024 and sell it today you would earn a total of  391,000  from holding SSIAM VNX50 ETF or generate 24.84% return on investment over 90 days.

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

Hochiminh City Metal  vs.  SSIAM VNX50 ETF

Hochiminh City Metal

Risk-Adjusted Performance

7 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Hochiminh City Metal are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Hochiminh City may actually be approaching a critical reversion point that can send shares even higher in February 2025.

SSIAM VNX50 ETF

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSIAM VNX50 ETF has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, SSIAM VNX50 is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Hochiminh City and SSIAM VNX50

The main advantage of trading using opposite Hochiminh City and SSIAM VNX50 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, SSIAM VNX50 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 VNX50 will offset losses from the drop in SSIAM VNX50's long position.

The idea behind Hochiminh City Metal and SSIAM VNX50 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.