Correlation Between JPM Global and VinaCapital Vietnam

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

By analyzing existing cross correlation between JPM Global Research and VinaCapital Vietnam Opportunity, you can compare the effects of market volatilities on JPM Global and VinaCapital 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 JPM Global with a short position of VinaCapital Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of JPM Global and VinaCapital Vietnam.

Diversification Opportunities for JPM Global and VinaCapital Vietnam

0.63

Correlation Coefficient

JPM Global  VinaCapital Vietnam

Poor diversification

The 3 months correlation between JPM and VinaCapital is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding JPM Global Research and VinaCapital Vietnam Opportunit in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VinaCapital Vietnam and JPM Global 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 JPM Global Research are associated (or correlated) with VinaCapital Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VinaCapital Vietnam has no effect on the direction of JPM Global i.e., JPM Global and VinaCapital Vietnam go up and down completely randomly.

Pair Corralation between JPM Global and VinaCapital Vietnam

Assuming the 90 days trading horizon JPM Global Research is expected to generate 0.84 times more return on investment than VinaCapital Vietnam. However, JPM Global Research is 1.2 times less risky than VinaCapital Vietnam. It trades about -0.1 of its potential returns per unit of risk. VinaCapital Vietnam Opportunity is currently generating about -0.09 per unit of risk. If you would invest  251,875  in JPM Global Research on December 24, 2024 and sell it today you would lose (12,700) from holding JPM Global Research or give up 5.04% of portfolio value over 90 days.

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

JPM Global Research  vs.  VinaCapital Vietnam Opportunit

JPM Global Research

Risk-Adjusted Performance

Very Weak

Over the last 90 days JPM Global Research has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, JPM Global is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

VinaCapital Vietnam

Risk-Adjusted Performance

Very Weak

Over the last 90 days VinaCapital Vietnam Opportunity has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, VinaCapital Vietnam is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with JPM Global and VinaCapital Vietnam

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

The idea behind JPM Global Research and VinaCapital Vietnam Opportunity 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.