Correlation Between Construction and Vietnam National

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

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

Diversification Opportunities for Construction and Vietnam National

0.71

Correlation Coefficient

Construction  Vietnam National

Poor diversification

The 3 months correlation between Construction and Vietnam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Construction And Investment and Vietnam National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam National Rei and Construction 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 Construction And Investment are associated (or correlated) with Vietnam National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam National Rei has no effect on the direction of Construction i.e., Construction and Vietnam National go up and down completely randomly.

Pair Corralation between Construction and Vietnam National

Assuming the 90 days trading horizon Construction is expected to generate 1.45 times less return on investment than Vietnam National. In addition to that, Construction is 1.6 times more volatile than Vietnam National Reinsurance. It trades about 0.07 of its total potential returns per unit of risk. Vietnam National Reinsurance is currently generating about 0.16 per unit of volatility. If you would invest  2,170,000  in Vietnam National Reinsurance on December 24, 2024 and sell it today you would earn a total of  290,000  from holding Vietnam National Reinsurance or generate 13.36% return on investment over 90 days.

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

Construction And Investment  vs.  Vietnam National Reinsurance

Construction And Inv

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Construction And Investment are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Vietnam National Rei

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam National Reinsurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam National displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Construction and Vietnam National

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

The idea behind Construction And Investment and Vietnam National Reinsurance 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.

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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.