Correlation Between Hochiminh City and Vietnam Airlines
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Vietnam Airlines 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 Vietnam Airlines 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 Vietnam Airlines JSC, you can compare the effects of market volatilities on Hochiminh City and Vietnam Airlines 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 Vietnam Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Vietnam Airlines.
Diversification Opportunities for Hochiminh City and Vietnam Airlines
0.17 | Correlation Coefficient |
Average diversification
The 3 months correlation between Hochiminh and Vietnam is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Vietnam Airlines JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Airlines JSC 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 Vietnam Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Airlines JSC has no effect on the direction of Hochiminh City i.e., Hochiminh City and Vietnam Airlines go up and down completely randomly.
Pair Corralation between Hochiminh City and Vietnam Airlines
Assuming the 90 days trading horizon Hochiminh City is expected to generate 3.73 times less return on investment than Vietnam Airlines. But when comparing it to its historical volatility, Hochiminh City Metal is 2.39 times less risky than Vietnam Airlines. It trades about 0.11 of its potential returns per unit of risk. Vietnam Airlines JSC is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest 2,065,000 in Vietnam Airlines JSC on September 14, 2024 and sell it today you would earn a total of 615,000 from holding Vietnam Airlines JSC or generate 29.78% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.46% |
Values | Daily Returns |
Hochiminh City Metal vs. Vietnam Airlines JSC
Performance |
Timeline |
Hochiminh City Metal |
Vietnam Airlines JSC |
Hochiminh City and Vietnam Airlines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hochiminh City and Vietnam Airlines
The main advantage of trading using opposite Hochiminh City and Vietnam Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Vietnam Airlines 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 Vietnam Airlines will offset losses from the drop in Vietnam Airlines' long position.Hochiminh City vs. Saigon Viendong Technology | Hochiminh City vs. PetroVietnam Drilling Well | Hochiminh City vs. Post and Telecommunications | Hochiminh City vs. PVI Reinsurance Corp |
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Check out your portfolio center.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 Global Correlations module to find global opportunities by holding instruments from different markets.
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