Correlation Between Vina2 Investment and Japan Vietnam

Can any of the company-specific risk be diversified away by investing in both Vina2 Investment and Japan Vietnam 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 Vina2 Investment and Japan Vietnam into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vina2 Investment and and Japan Vietnam Medical, you can compare the effects of market volatilities on Vina2 Investment and Japan Vietnam 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 Vina2 Investment with a short position of Japan Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vina2 Investment and Japan Vietnam.

Diversification Opportunities for Vina2 Investment and Japan Vietnam

0.37

Correlation Coefficient

Vina2 Investment  Japan Vietnam

Weak diversification

The 3 months correlation between Vina2 and Japan is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Vina2 Investment and and Japan Vietnam Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Vietnam Medical and Vina2 Investment 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 Vina2 Investment and are associated (or correlated) with Japan Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Vietnam Medical has no effect on the direction of Vina2 Investment i.e., Vina2 Investment and Japan Vietnam go up and down completely randomly.

Pair Corralation between Vina2 Investment and Japan Vietnam

Assuming the 90 days trading horizon Vina2 Investment is expected to generate 1.74 times less return on investment than Japan Vietnam. In addition to that, Vina2 Investment is 1.35 times more volatile than Japan Vietnam Medical. It trades about 0.15 of its total potential returns per unit of risk. Japan Vietnam Medical is currently generating about 0.35 per unit of volatility. If you would invest  318,000  in Japan Vietnam Medical on September 27, 2024 and sell it today you would earn a total of  62,000  from holding Japan Vietnam Medical or generate 19.5% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Vina2 Investment and  vs.  Japan Vietnam Medical

Vina2 Investment

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vina2 Investment and are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vina2 Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

Japan Vietnam Medical

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Japan Vietnam Medical are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Japan Vietnam displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vina2 Investment and Japan Vietnam

The main advantage of trading using opposite Vina2 Investment and Japan Vietnam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vina2 Investment position performs unexpectedly, Japan Vietnam 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 Japan Vietnam will offset losses from the drop in Japan Vietnam's long position.

The idea behind Vina2 Investment and and Japan Vietnam Medical 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.

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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.