Correlation Between Thong Nhat and Vu Dang

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

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

Diversification Opportunities for Thong Nhat and Vu Dang

-0.24

Correlation Coefficient

Thong Nhat  Vu Dang

Very good diversification

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

Pair Corralation between Thong Nhat and Vu Dang

Assuming the 90 days trading horizon Thong Nhat Rubber is expected to under-perform the Vu Dang. In addition to that, Thong Nhat is 2.02 times more volatile than Vu Dang Investment. It trades about -0.01 of its total potential returns per unit of risk. Vu Dang Investment is currently generating about 0.02 per unit of volatility. If you would invest  312,000  in Vu Dang Investment on October 11, 2024 and sell it today you would earn a total of  15,000  from holding Vu Dang Investment or generate 4.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	45.53%
Values	Daily Returns

Thong Nhat Rubber  vs.  Vu Dang Investment

Thong Nhat Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thong Nhat Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Vu Dang Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Vu Dang Investment are ranked lower than 2 (%) 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.

Pair Trading with Thong Nhat and Vu Dang

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

The idea behind Thong Nhat Rubber and Vu Dang Investment 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.