Correlation Between Vietnam National and Thanh Dat

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

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

Diversification Opportunities for Vietnam National and Thanh Dat

-0.81

Correlation Coefficient

Vietnam National  Thanh Dat

Pay attention - limited upside

The 3 months correlation between Vietnam and Thanh is -0.81. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam National Reinsurance and Thanh Dat Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Dat Investment and Vietnam National 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 National Reinsurance are associated (or correlated) with Thanh Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Dat Investment has no effect on the direction of Vietnam National i.e., Vietnam National and Thanh Dat go up and down completely randomly.

Pair Corralation between Vietnam National and Thanh Dat

Assuming the 90 days trading horizon Vietnam National Reinsurance is expected to generate 0.83 times more return on investment than Thanh Dat. However, Vietnam National Reinsurance is 1.2 times less risky than Thanh Dat. It trades about 0.16 of its potential returns per unit of risk. Thanh Dat Investment is currently generating about -0.13 per unit of risk. If you would invest  2,170,000  in Vietnam National Reinsurance on December 20, 2024 and sell it today you would earn a total of  310,000  from holding Vietnam National Reinsurance or generate 14.29% return on investment over 90 days.

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

Vietnam National Reinsurance  vs.  Thanh Dat Investment

Vietnam National Rei

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam National Reinsurance are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam National displayed solid returns over the last few months and may actually be approaching a breakup point.

Thanh Dat Investment

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thanh Dat Investment 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 fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Vietnam National and Thanh Dat

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

The idea behind Vietnam National Reinsurance and Thanh Dat Investment 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.