Correlation Between Tienlen Steel and VietinBank Securities

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

By analyzing existing cross correlation between Tienlen Steel Corp and VietinBank Securities JSC, you can compare the effects of market volatilities on Tienlen Steel and VietinBank Securities 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 Tienlen Steel with a short position of VietinBank Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tienlen Steel and VietinBank Securities.

Diversification Opportunities for Tienlen Steel and VietinBank Securities

0.92

Correlation Coefficient

Tienlen Steel  VietinBank Securities

Almost no diversification

The 3 months correlation between Tienlen and VietinBank is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Tienlen Steel Corp and VietinBank Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VietinBank Securities JSC and Tienlen Steel 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 Tienlen Steel Corp are associated (or correlated) with VietinBank Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VietinBank Securities JSC has no effect on the direction of Tienlen Steel i.e., Tienlen Steel and VietinBank Securities go up and down completely randomly.

Pair Corralation between Tienlen Steel and VietinBank Securities

Assuming the 90 days trading horizon Tienlen Steel Corp is expected to generate 1.67 times more return on investment than VietinBank Securities. However, Tienlen Steel is 1.67 times more volatile than VietinBank Securities JSC. It trades about 0.14 of its potential returns per unit of risk. VietinBank Securities JSC is currently generating about 0.16 per unit of risk. If you would invest  468,000  in Tienlen Steel Corp on December 25, 2024 and sell it today you would earn a total of  90,000  from holding Tienlen Steel Corp or generate 19.23% return on investment over 90 days.

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

Tienlen Steel Corp  vs.  VietinBank Securities JSC

Tienlen Steel Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tienlen Steel Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Tienlen Steel displayed solid returns over the last few months and may actually be approaching a breakup point.

VietinBank Securities JSC

Risk-Adjusted Performance

Good

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

Pair Trading with Tienlen Steel and VietinBank Securities

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

The idea behind Tienlen Steel Corp and VietinBank Securities 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 Stocks Directory module to find actively traded stocks across global markets.