Correlation Between HVC Investment and Vietnam Airlines

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

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

Diversification Opportunities for HVC Investment and Vietnam Airlines

0.31

Correlation Coefficient

HVC Investment  Vietnam Airlines

Weak diversification

The 3 months correlation between HVC and Vietnam is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding HVC Investment and 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 HVC Investment 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 HVC Investment and 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 HVC Investment i.e., HVC Investment and Vietnam Airlines go up and down completely randomly.

Pair Corralation between HVC Investment and Vietnam Airlines

Assuming the 90 days trading horizon HVC Investment and is expected to under-perform the Vietnam Airlines. In addition to that, HVC Investment is 1.05 times more volatile than Vietnam Airlines JSC. It trades about -0.06 of its total potential returns per unit of risk. Vietnam Airlines JSC is currently generating about -0.01 per unit of volatility. If you would invest  2,930,000  in Vietnam Airlines JSC on December 20, 2024 and sell it today you would lose (90,000) from holding Vietnam Airlines JSC or give up 3.07% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.31%
Values	Daily Returns

HVC Investment and  vs.  Vietnam Airlines JSC

HVC Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days HVC Investment and has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's technical indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Vietnam Airlines JSC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Vietnam Airlines JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Vietnam Airlines is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with HVC Investment and Vietnam Airlines

The main advantage of trading using opposite HVC Investment and Vietnam Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HVC Investment 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.

The idea behind HVC Investment and and Vietnam Airlines 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 Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..