Correlation Between HNX 30 and Vincom Retail

Can any of the company-specific risk be diversified away by investing in both HNX 30 and Vincom Retail 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 HNX 30 and Vincom Retail into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between HNX 30 and Vincom Retail JSC, you can compare the effects of market volatilities on HNX 30 and Vincom Retail 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 HNX 30 with a short position of Vincom Retail. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNX 30 and Vincom Retail.

Diversification Opportunities for HNX 30 and Vincom Retail

0.81

Correlation Coefficient

HNX 30  Vincom Retail

Very poor diversification

The 3 months correlation between HNX and Vincom is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding HNX 30 and Vincom Retail JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vincom Retail JSC and HNX 30 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 HNX 30 are associated (or correlated) with Vincom Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vincom Retail JSC has no effect on the direction of HNX 30 i.e., HNX 30 and Vincom Retail go up and down completely randomly.

Pair Corralation between HNX 30 and Vincom Retail

Assuming the 90 days trading horizon HNX 30 is expected to under-perform the Vincom Retail. But the index apears to be less risky and, when comparing its historical volatility, HNX 30 is 2.09 times less risky than Vincom Retail. The index trades about -0.21 of its potential returns per unit of risk. The Vincom Retail JSC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,920,000  in Vincom Retail JSC on August 30, 2024 and sell it today you would earn a total of  25,000  from holding Vincom Retail JSC or generate 1.3% return on investment over 90 days.

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

HNX 30  vs.  Vincom Retail JSC

Pair Trading with HNX 30 and Vincom Retail

The main advantage of trading using opposite HNX 30 and Vincom Retail positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNX 30 position performs unexpectedly, Vincom Retail 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 Vincom Retail will offset losses from the drop in Vincom Retail's long position.

The idea behind HNX 30 and Vincom Retail 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.