Correlation Between VinaCapital Vietnam and Xtrackers

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

By analyzing existing cross correlation between VinaCapital Vietnam Opportunity and Xtrackers Ie Plc, you can compare the effects of market volatilities on VinaCapital Vietnam and Xtrackers 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 VinaCapital Vietnam with a short position of Xtrackers. Check out your portfolio center. Please also check ongoing floating volatility patterns of VinaCapital Vietnam and Xtrackers.

Diversification Opportunities for VinaCapital Vietnam and Xtrackers

-0.15

Correlation Coefficient

VinaCapital Vietnam  Xtrackers

Good diversification

The 3 months correlation between VinaCapital and Xtrackers is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding VinaCapital Vietnam Opportunit and Xtrackers Ie Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Xtrackers Ie Plc and VinaCapital Vietnam 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 VinaCapital Vietnam Opportunity are associated (or correlated) with Xtrackers. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Xtrackers Ie Plc has no effect on the direction of VinaCapital Vietnam i.e., VinaCapital Vietnam and Xtrackers go up and down completely randomly.

Pair Corralation between VinaCapital Vietnam and Xtrackers

Assuming the 90 days trading horizon VinaCapital Vietnam Opportunity is expected to generate 1.39 times more return on investment than Xtrackers. However, VinaCapital Vietnam is 1.39 times more volatile than Xtrackers Ie Plc. It trades about 0.11 of its potential returns per unit of risk. Xtrackers Ie Plc is currently generating about 0.09 per unit of risk. If you would invest  44,870  in VinaCapital Vietnam Opportunity on October 25, 2024 and sell it today you would earn a total of  3,030  from holding VinaCapital Vietnam Opportunity or generate 6.75% return on investment over 90 days.

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

VinaCapital Vietnam Opportunit  vs.  Xtrackers Ie Plc

VinaCapital Vietnam

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VinaCapital Vietnam Opportunity are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, VinaCapital Vietnam may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Xtrackers Ie Plc

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Xtrackers Ie Plc are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Xtrackers is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with VinaCapital Vietnam and Xtrackers

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

The idea behind VinaCapital Vietnam Opportunity and Xtrackers Ie Plc 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.