Correlation Between Tri Viet and Vietnam Airlines

Can any of the company-specific risk be diversified away by investing in both Tri Viet and Vietnam Airlines 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 Vietnam Airlines 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 Vietnam Airlines JSC, you can compare the effects of market volatilities on Tri Viet and Vietnam Airlines 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 Vietnam Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Viet and Vietnam Airlines.

Diversification Opportunities for Tri Viet and Vietnam Airlines

0.26

Correlation Coefficient

Tri Viet  Vietnam Airlines

Modest diversification

The 3 months correlation between Tri and Vietnam is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Tri Viet Management and Vietnam Airlines JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Airlines JSC 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 Vietnam Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Airlines JSC has no effect on the direction of Tri Viet i.e., Tri Viet and Vietnam Airlines go up and down completely randomly.

Pair Corralation between Tri Viet and Vietnam Airlines

Assuming the 90 days trading horizon Tri Viet is expected to generate 3.14 times less return on investment than Vietnam Airlines. But when comparing it to its historical volatility, Tri Viet Management is 1.06 times less risky than Vietnam Airlines. It trades about 0.06 of its potential returns per unit of risk. Vietnam Airlines JSC is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  2,065,000  in Vietnam Airlines JSC on September 16, 2024 and sell it today you would earn a total of  585,000  from holding Vietnam Airlines JSC or generate 28.33% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.48%
Values	Daily Returns

Tri Viet Management  vs.  Vietnam Airlines JSC

Tri Viet Management

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Tri Viet Management are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Tri Viet may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Vietnam Airlines JSC

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Airlines JSC are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Airlines displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Tri Viet and Vietnam Airlines

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

The idea behind Tri Viet Management and Vietnam Airlines 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.

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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.