Correlation Between Vietnam National and Post

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

Diversification Opportunities for Vietnam National and Post

0.81

Correlation Coefficient

Vietnam National  Post

Very poor diversification

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

Pair Corralation between Vietnam National and Post

Assuming the 90 days trading horizon Vietnam National is expected to generate 2.21 times less return on investment than Post. But when comparing it to its historical volatility, Vietnam National Reinsurance is 1.98 times less risky than Post. It trades about 0.13 of its potential returns per unit of risk. Post and Telecommunications is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  452,000  in Post and Telecommunications on December 28, 2024 and sell it today you would earn a total of  116,000  from holding Post and Telecommunications or generate 25.66% return on investment over 90 days.

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

Vietnam National Reinsurance  vs.  Post and Telecommunications

Vietnam National Rei

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam National Reinsurance are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam National may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Post and Telecommuni

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Post and Telecommunications are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Post displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Vietnam National and Post

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

The idea behind Vietnam National Reinsurance and Post and Telecommunications 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.