Correlation Between Vnsteel Vicasa and Vietnam Rubber

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

By analyzing existing cross correlation between Vnsteel Vicasa JSC and Vietnam Rubber Group, you can compare the effects of market volatilities on Vnsteel Vicasa and Vietnam Rubber 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 Vnsteel Vicasa with a short position of Vietnam Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vnsteel Vicasa and Vietnam Rubber.

Diversification Opportunities for Vnsteel Vicasa and Vietnam Rubber

0.44

Correlation Coefficient

Vnsteel Vicasa  Vietnam Rubber

Very weak diversification

The 3 months correlation between Vnsteel and Vietnam is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Vnsteel Vicasa JSC and Vietnam Rubber Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Rubber Group and Vnsteel Vicasa 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 Vnsteel Vicasa JSC are associated (or correlated) with Vietnam Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Rubber Group has no effect on the direction of Vnsteel Vicasa i.e., Vnsteel Vicasa and Vietnam Rubber go up and down completely randomly.

Pair Corralation between Vnsteel Vicasa and Vietnam Rubber

Assuming the 90 days trading horizon Vnsteel Vicasa JSC is expected to under-perform the Vietnam Rubber. In addition to that, Vnsteel Vicasa is 1.92 times more volatile than Vietnam Rubber Group. It trades about -0.03 of its total potential returns per unit of risk. Vietnam Rubber Group is currently generating about 0.13 per unit of volatility. If you would invest  3,085,000  in Vietnam Rubber Group on December 22, 2024 and sell it today you would earn a total of  370,000  from holding Vietnam Rubber Group or generate 11.99% return on investment over 90 days.

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

Vnsteel Vicasa JSC  vs.  Vietnam Rubber Group

Vnsteel Vicasa JSC

Risk-Adjusted Performance

Very Weak

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

Vietnam Rubber Group

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Rubber Group are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Rubber may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Vnsteel Vicasa and Vietnam Rubber

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

The idea behind Vnsteel Vicasa JSC and Vietnam Rubber Group 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.