Correlation Between VinFast Auto and East Japan

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

By analyzing existing cross correlation between VinFast Auto Ltd and East Japan Railway, you can compare the effects of market volatilities on VinFast Auto and East Japan 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 VinFast Auto with a short position of East Japan. Check out your portfolio center. Please also check ongoing floating volatility patterns of VinFast Auto and East Japan.

Diversification Opportunities for VinFast Auto and East Japan

-0.83

Correlation Coefficient

VinFast Auto  East Japan

Pay attention - limited upside

The 3 months correlation between VinFast and East is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding VinFast Auto Ltd and East Japan Railway in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on East Japan Railway and VinFast Auto 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 VinFast Auto Ltd are associated (or correlated) with East Japan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of East Japan Railway has no effect on the direction of VinFast Auto i.e., VinFast Auto and East Japan go up and down completely randomly.

Pair Corralation between VinFast Auto and East Japan

Considering the 90-day investment horizon VinFast Auto Ltd is expected to under-perform the East Japan. But the stock apears to be less risky and, when comparing its historical volatility, VinFast Auto Ltd is 1.0 times less risky than East Japan. The stock trades about -0.08 of its potential returns per unit of risk. The East Japan Railway is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  1,750  in East Japan Railway on December 28, 2024 and sell it today you would earn a total of  281.00  from holding East Japan Railway or generate 16.06% return on investment over 90 days.

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

VinFast Auto Ltd  vs.  East Japan Railway

VinFast Auto

Risk-Adjusted Performance

Very Weak

Over the last 90 days VinFast Auto Ltd 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 technical and fundamental indicators remain comparatively stable which may send shares a bit higher in April 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

East Japan Railway

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in East Japan Railway are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, East Japan reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VinFast Auto and East Japan

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

The idea behind VinFast Auto Ltd and East Japan Railway 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..