Correlation Between Tri Viet and Foreign Trade

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

By analyzing existing cross correlation between Tri Viet Management and Foreign Trade Development, you can compare the effects of market volatilities on Tri Viet and Foreign Trade 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 Tri Viet with a short position of Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Viet and Foreign Trade.

Diversification Opportunities for Tri Viet and Foreign Trade

-0.36

Correlation Coefficient

Tri Viet  Foreign Trade

Very good diversification

The 3 months correlation between Tri and Foreign is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Tri Viet Management and Foreign Trade Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade Development and Tri Viet 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 Tri Viet Management are associated (or correlated) with Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Development has no effect on the direction of Tri Viet i.e., Tri Viet and Foreign Trade go up and down completely randomly.

Pair Corralation between Tri Viet and Foreign Trade

Assuming the 90 days trading horizon Tri Viet Management is expected to under-perform the Foreign Trade. In addition to that, Tri Viet is 7.53 times more volatile than Foreign Trade Development. It trades about -0.38 of its total potential returns per unit of risk. Foreign Trade Development is currently generating about 0.33 per unit of volatility. If you would invest  1,680,000  in Foreign Trade Development on October 26, 2024 and sell it today you would earn a total of  10,000  from holding Foreign Trade Development or generate 0.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	42.86%
Values	Daily Returns

Tri Viet Management  vs.  Foreign Trade Development

Tri Viet Management

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Tri Viet Management has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Tri Viet is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Foreign Trade Development

Risk-Adjusted Performance

9 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Foreign Trade Development are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Foreign Trade displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tri Viet and Foreign Trade

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

The idea behind Tri Viet Management and Foreign Trade Development 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.