Correlation Between Vietnam National and FIT INVEST
Can any of the company-specific risk be diversified away by investing in both Vietnam National and FIT INVEST 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 FIT INVEST 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 FIT INVEST JSC, you can compare the effects of market volatilities on Vietnam National and FIT INVEST 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 FIT INVEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam National and FIT INVEST.
Diversification Opportunities for Vietnam National and FIT INVEST
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vietnam and FIT is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam National Reinsurance and FIT INVEST JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT INVEST JSC 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 FIT INVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT INVEST JSC has no effect on the direction of Vietnam National i.e., Vietnam National and FIT INVEST go up and down completely randomly.
Pair Corralation between Vietnam National and FIT INVEST
Assuming the 90 days trading horizon Vietnam National Reinsurance is expected to under-perform the FIT INVEST. But the stock apears to be less risky and, when comparing its historical volatility, Vietnam National Reinsurance is 1.76 times less risky than FIT INVEST. The stock trades about -0.02 of its potential returns per unit of risk. The FIT INVEST JSC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 419,000 in FIT INVEST JSC on September 15, 2024 and sell it today you would earn a total of 9,000 from holding FIT INVEST JSC or generate 2.15% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Vietnam National Reinsurance vs. FIT INVEST JSC
Performance |
Timeline |
Vietnam National Rei |
FIT INVEST JSC |
Vietnam National and FIT INVEST Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vietnam National and FIT INVEST
The main advantage of trading using opposite Vietnam National and FIT INVEST positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam National position performs unexpectedly, FIT INVEST 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 FIT INVEST will offset losses from the drop in FIT INVEST's long position.Vietnam National vs. FIT INVEST JSC | Vietnam National vs. Damsan JSC | Vietnam National vs. An Phat Plastic | Vietnam National vs. Alphanam ME |
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Check out your portfolio center.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.
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