Correlation Between Vnsteel Vicasa and Phuoc Hoa

Can any of the company-specific risk be diversified away by investing in both Vnsteel Vicasa and Phuoc Hoa 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 Phuoc Hoa 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 Phuoc Hoa Rubber, you can compare the effects of market volatilities on Vnsteel Vicasa and Phuoc Hoa 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 Phuoc Hoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vnsteel Vicasa and Phuoc Hoa.

Diversification Opportunities for Vnsteel Vicasa and Phuoc Hoa

0.2

Correlation Coefficient

Vnsteel Vicasa  Phuoc Hoa

Modest diversification

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

Pair Corralation between Vnsteel Vicasa and Phuoc Hoa

Assuming the 90 days trading horizon Vnsteel Vicasa JSC is expected to generate 3.89 times more return on investment than Phuoc Hoa. However, Vnsteel Vicasa is 3.89 times more volatile than Phuoc Hoa Rubber. It trades about 0.4 of its potential returns per unit of risk. Phuoc Hoa Rubber is currently generating about 0.0 per unit of risk. If you would invest  841,000  in Vnsteel Vicasa JSC on September 21, 2024 and sell it today you would earn a total of  579,000  from holding Vnsteel Vicasa JSC or generate 68.85% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	63.64%
Values	Daily Returns

Vnsteel Vicasa JSC  vs.  Phuoc Hoa Rubber

Vnsteel Vicasa JSC

Risk-Adjusted Performance

22 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vnsteel Vicasa JSC are ranked lower than 22 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vnsteel Vicasa displayed solid returns over the last few months and may actually be approaching a breakup point.

Phuoc Hoa Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vnsteel Vicasa and Phuoc Hoa

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

The idea behind Vnsteel Vicasa JSC and Phuoc Hoa Rubber 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.