Correlation Between Din Capital and Viet Thanh

Can any of the company-specific risk be diversified away by investing in both Din Capital and Viet Thanh 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 Viet Thanh 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 Viet Thanh Plastic, you can compare the effects of market volatilities on Din Capital and Viet Thanh 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 Viet Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Din Capital and Viet Thanh.

Diversification Opportunities for Din Capital and Viet Thanh

0.33

Correlation Coefficient

Din Capital  Viet Thanh

Weak diversification

The 3 months correlation between Din and Viet is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Din Capital Investment and Viet Thanh Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viet Thanh Plastic 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 Viet Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viet Thanh Plastic has no effect on the direction of Din Capital i.e., Din Capital and Viet Thanh go up and down completely randomly.

Pair Corralation between Din Capital and Viet Thanh

Assuming the 90 days trading horizon Din Capital is expected to generate 4.93 times less return on investment than Viet Thanh. But when comparing it to its historical volatility, Din Capital Investment is 1.14 times less risky than Viet Thanh. It trades about 0.02 of its potential returns per unit of risk. Viet Thanh Plastic is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  760,000  in Viet Thanh Plastic on October 3, 2024 and sell it today you would earn a total of  980,000  from holding Viet Thanh Plastic or generate 128.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	94.67%
Values	Daily Returns

Din Capital Investment  vs.  Viet Thanh Plastic

Din Capital Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Din Capital Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Din Capital displayed solid returns over the last few months and may actually be approaching a breakup point.

Viet Thanh Plastic

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Viet Thanh Plastic are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Viet Thanh 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 Viet Thanh

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

The idea behind Din Capital Investment and Viet Thanh Plastic 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.