Correlation Between Mobile World and FPT Digital

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

By analyzing existing cross correlation between Mobile World Investment and FPT Digital Retail, you can compare the effects of market volatilities on Mobile World and FPT Digital 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 Mobile World with a short position of FPT Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mobile World and FPT Digital.

Diversification Opportunities for Mobile World and FPT Digital

-0.28

Correlation Coefficient

Mobile World  FPT Digital

Very good diversification

The 3 months correlation between Mobile and FPT is -0.28. Overlapping area represents the amount of risk that can be diversified away by holding Mobile World Investment and FPT Digital Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Digital Retail and Mobile World 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 Mobile World Investment are associated (or correlated) with FPT Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Digital Retail has no effect on the direction of Mobile World i.e., Mobile World and FPT Digital go up and down completely randomly.

Pair Corralation between Mobile World and FPT Digital

Assuming the 90 days trading horizon Mobile World Investment is expected to under-perform the FPT Digital. But the stock apears to be less risky and, when comparing its historical volatility, Mobile World Investment is 1.19 times less risky than FPT Digital. The stock trades about -0.03 of its potential returns per unit of risk. The FPT Digital Retail is currently generating about 0.0 of returns per unit of risk over similar time horizon. If you would invest  18,100,000  in FPT Digital Retail on December 5, 2024 and sell it today you would lose (150,000) from holding FPT Digital Retail or give up 0.83% of portfolio value over 90 days.

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

Mobile World Investment  vs.  FPT Digital Retail

Mobile World Investment

Risk-Adjusted Performance

Weak

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

FPT Digital Retail

Risk-Adjusted Performance

Very Weak

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

Pair Trading with Mobile World and FPT Digital

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

The idea behind Mobile World Investment and FPT Digital Retail 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.