Correlation Between Din Capital and Vietnam Airlines

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

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

Diversification Opportunities for Din Capital and Vietnam Airlines

-0.15

Correlation Coefficient

Din Capital  Vietnam Airlines

Good diversification

The 3 months correlation between Din and Vietnam is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Din Capital Investment 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 Din Capital 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 Din Capital Investment 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 Din Capital i.e., Din Capital and Vietnam Airlines go up and down completely randomly.

Pair Corralation between Din Capital and Vietnam Airlines

Assuming the 90 days trading horizon Din Capital Investment is expected to under-perform the Vietnam Airlines. But the stock apears to be less risky and, when comparing its historical volatility, Din Capital Investment is 1.34 times less risky than Vietnam Airlines. The stock trades about 0.0 of its potential returns per unit of risk. The Vietnam Airlines JSC is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  2,850,000  in Vietnam Airlines JSC on December 28, 2024 and sell it today you would earn a total of  30,000  from holding Vietnam Airlines JSC or generate 1.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.14%
Values	Daily Returns

Din Capital Investment  vs.  Vietnam Airlines JSC

Din Capital Investment

Risk-Adjusted Performance

Very Weak

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

Vietnam Airlines JSC

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Airlines JSC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. 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 Din Capital and Vietnam Airlines

The main advantage of trading using opposite Din Capital and Vietnam Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Din Capital 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 Din Capital Investment 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 Global Correlations module to find global opportunities by holding instruments from different markets.