Correlation Between Vu Dang and HVC Investment

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

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

Diversification Opportunities for Vu Dang and HVC Investment

0.24

Correlation Coefficient

Vu Dang  HVC Investment

Modest diversification

The 3 months correlation between SVD and HVC is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Vu Dang Investment and HVC Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HVC Investment and Vu Dang 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 Vu Dang Investment are associated (or correlated) with HVC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HVC Investment has no effect on the direction of Vu Dang i.e., Vu Dang and HVC Investment go up and down completely randomly.

Pair Corralation between Vu Dang and HVC Investment

Assuming the 90 days trading horizon Vu Dang is expected to generate 3.86 times less return on investment than HVC Investment. In addition to that, Vu Dang is 1.13 times more volatile than HVC Investment and. It trades about 0.02 of its total potential returns per unit of risk. HVC Investment and is currently generating about 0.08 per unit of volatility. If you would invest  452,088  in HVC Investment and on October 3, 2024 and sell it today you would earn a total of  520,912  from holding HVC Investment and or generate 115.22% return on investment over 90 days.

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

Vu Dang Investment  vs.  HVC Investment and

Vu Dang Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vu Dang Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Vu Dang is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

HVC Investment

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Vu Dang and HVC Investment

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

The idea behind Vu Dang Investment and HVC Investment and 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.