Correlation Between Vietnam Technological and Vietnam Rubber

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

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

Diversification Opportunities for Vietnam Technological and Vietnam Rubber

0.86

Correlation Coefficient

Vietnam Technological  Vietnam Rubber

Very poor diversification

The 3 months correlation between Vietnam and Vietnam is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Technological And and Vietnam Rubber Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Rubber Group and Vietnam Technological 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 Vietnam Technological And are associated (or correlated) with Vietnam Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Rubber Group has no effect on the direction of Vietnam Technological i.e., Vietnam Technological and Vietnam Rubber go up and down completely randomly.

Pair Corralation between Vietnam Technological and Vietnam Rubber

Assuming the 90 days trading horizon Vietnam Technological And is expected to generate 1.03 times more return on investment than Vietnam Rubber. However, Vietnam Technological is 1.03 times more volatile than Vietnam Rubber Group. It trades about 0.22 of its potential returns per unit of risk. Vietnam Rubber Group is currently generating about 0.15 per unit of risk. If you would invest  2,440,000  in Vietnam Technological And on December 30, 2024 and sell it today you would earn a total of  525,000  from holding Vietnam Technological And or generate 21.52% return on investment over 90 days.

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

Vietnam Technological And  vs.  Vietnam Rubber Group

Vietnam Technological And

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Technological And are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental drivers, Vietnam Technological displayed solid returns over the last few months and may actually be approaching a breakup point.

Vietnam Rubber Group

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Rubber Group are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Rubber displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vietnam Technological and Vietnam Rubber

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

The idea behind Vietnam Technological And and Vietnam Rubber Group 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.