Correlation Between Viet Nam and DOMESCO Medical

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

By analyzing existing cross correlation between Viet Nam Construction and DOMESCO Medical Import, you can compare the effects of market volatilities on Viet Nam and DOMESCO Medical 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 Viet Nam with a short position of DOMESCO Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viet Nam and DOMESCO Medical.

Diversification Opportunities for Viet Nam and DOMESCO Medical

-0.2

Correlation Coefficient

Viet Nam  DOMESCO Medical

Good diversification

The 3 months correlation between Viet and DOMESCO is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Viet Nam Construction and DOMESCO Medical Import in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOMESCO Medical Import and Viet Nam 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 Viet Nam Construction are associated (or correlated) with DOMESCO Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOMESCO Medical Import has no effect on the direction of Viet Nam i.e., Viet Nam and DOMESCO Medical go up and down completely randomly.

Pair Corralation between Viet Nam and DOMESCO Medical

Assuming the 90 days trading horizon Viet Nam Construction is expected to generate 2.46 times more return on investment than DOMESCO Medical. However, Viet Nam is 2.46 times more volatile than DOMESCO Medical Import. It trades about 0.04 of its potential returns per unit of risk. DOMESCO Medical Import is currently generating about 0.08 per unit of risk. If you would invest  1,009,905  in Viet Nam Construction on October 11, 2024 and sell it today you would earn a total of  210,095  from holding Viet Nam Construction or generate 20.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	49.66%
Values	Daily Returns

Viet Nam Construction  vs.  DOMESCO Medical Import

Viet Nam Construction

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Viet Nam Construction are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Viet Nam displayed solid returns over the last few months and may actually be approaching a breakup point.

DOMESCO Medical Import

Risk-Adjusted Performance

11 of 100

Good

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

Pair Trading with Viet Nam and DOMESCO Medical

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

The idea behind Viet Nam Construction and DOMESCO Medical Import 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.