Correlation Between Phuoc Hoa and Vietnam National

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

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

Diversification Opportunities for Phuoc Hoa and Vietnam National

0.79

Correlation Coefficient

Phuoc Hoa  Vietnam National

Poor diversification

The 3 months correlation between Phuoc and Vietnam is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Phuoc Hoa Rubber 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 Phuoc Hoa 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 Phuoc Hoa Rubber 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 Phuoc Hoa i.e., Phuoc Hoa and Vietnam National go up and down completely randomly.

Pair Corralation between Phuoc Hoa and Vietnam National

Assuming the 90 days trading horizon Phuoc Hoa Rubber is expected to generate 1.21 times more return on investment than Vietnam National. However, Phuoc Hoa is 1.21 times more volatile than Vietnam National Reinsurance. It trades about 0.18 of its potential returns per unit of risk. Vietnam National Reinsurance is currently generating about 0.16 per unit of risk. If you would invest  5,360,000  in Phuoc Hoa Rubber on December 24, 2024 and sell it today you would earn a total of  1,040,000  from holding Phuoc Hoa Rubber or generate 19.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.31%
Values	Daily Returns

Phuoc Hoa Rubber  vs.  Vietnam National Reinsurance

Phuoc Hoa Rubber

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Phuoc Hoa Rubber are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Phuoc Hoa displayed solid returns over the last few months and may actually be approaching a breakup point.

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 Phuoc Hoa and Vietnam National

The main advantage of trading using opposite Phuoc Hoa and Vietnam National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phuoc Hoa 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 Phuoc Hoa Rubber 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.