Correlation Between Viet Nam and Construction JSC

Can any of the company-specific risk be diversified away by investing in both Viet Nam and Construction JSC 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 Construction JSC 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 Construction JSC No5, you can compare the effects of market volatilities on Viet Nam and Construction JSC 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 Construction JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viet Nam and Construction JSC.

Diversification Opportunities for Viet Nam and Construction JSC

-0.23

Correlation Coefficient

Viet Nam  Construction JSC

Very good diversification

The 3 months correlation between Viet and Construction is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Viet Nam Construction and Construction JSC No5 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction JSC No5 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 Construction JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction JSC No5 has no effect on the direction of Viet Nam i.e., Viet Nam and Construction JSC go up and down completely randomly.

Pair Corralation between Viet Nam and Construction JSC

Assuming the 90 days trading horizon Viet Nam Construction is expected to generate 0.64 times more return on investment than Construction JSC. However, Viet Nam Construction is 1.56 times less risky than Construction JSC. It trades about 0.09 of its potential returns per unit of risk. Construction JSC No5 is currently generating about -0.05 per unit of risk. If you would invest  1,210,000  in Viet Nam Construction on December 23, 2024 and sell it today you would earn a total of  90,000  from holding Viet Nam Construction or generate 7.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

Viet Nam Construction  vs.  Construction JSC No5

Viet Nam Construction

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viet Nam Construction are ranked lower than 7 (%) 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.

Construction JSC No5

Risk-Adjusted Performance

Very Weak

Over the last 90 days Construction JSC No5 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Viet Nam and Construction JSC

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

The idea behind Viet Nam Construction and Construction JSC No5 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.