Correlation Between Vietnam Maritime and SSIAM VNFIN

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

By analyzing existing cross correlation between Vietnam Maritime Development and SSIAM VNFIN LEAD, you can compare the effects of market volatilities on Vietnam Maritime and SSIAM VNFIN 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 Vietnam Maritime with a short position of SSIAM VNFIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Maritime and SSIAM VNFIN.

Diversification Opportunities for Vietnam Maritime and SSIAM VNFIN

-0.14

Correlation Coefficient

Vietnam Maritime  SSIAM VNFIN

Good diversification

The 3 months correlation between Vietnam and SSIAM is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Maritime Development and SSIAM VNFIN LEAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIAM VNFIN LEAD and Vietnam Maritime 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 Vietnam Maritime Development are associated (or correlated) with SSIAM VNFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIAM VNFIN LEAD has no effect on the direction of Vietnam Maritime i.e., Vietnam Maritime and SSIAM VNFIN go up and down completely randomly.

Pair Corralation between Vietnam Maritime and SSIAM VNFIN

Assuming the 90 days trading horizon Vietnam Maritime Development is expected to generate 6.41 times more return on investment than SSIAM VNFIN. However, Vietnam Maritime is 6.41 times more volatile than SSIAM VNFIN LEAD. It trades about 0.0 of its potential returns per unit of risk. SSIAM VNFIN LEAD is currently generating about -0.02 per unit of risk. If you would invest  2,290,000  in Vietnam Maritime Development on October 9, 2024 and sell it today you would lose (150,000) from holding Vietnam Maritime Development or give up 6.55% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	66.67%
Values	Daily Returns

Vietnam Maritime Development  vs.  SSIAM VNFIN LEAD

Vietnam Maritime Dev

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vietnam Maritime Development has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

SSIAM VNFIN LEAD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SSIAM VNFIN LEAD has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, SSIAM VNFIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Vietnam Maritime and SSIAM VNFIN

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

The idea behind Vietnam Maritime Development and SSIAM VNFIN LEAD 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.