Correlation Between VTC Telecommunicatio and Sao Mai

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

By analyzing existing cross correlation between VTC Telecommunications JSC and Sao Mai Group, you can compare the effects of market volatilities on VTC Telecommunicatio and Sao Mai 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 VTC Telecommunicatio with a short position of Sao Mai. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTC Telecommunicatio and Sao Mai.

Diversification Opportunities for VTC Telecommunicatio and Sao Mai

-0.46

Correlation Coefficient

VTC Telecommunicatio  Sao Mai

Very good diversification

The 3 months correlation between VTC and Sao is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding VTC Telecommunications JSC and Sao Mai Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sao Mai Group and VTC Telecommunicatio 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 VTC Telecommunications JSC are associated (or correlated) with Sao Mai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sao Mai Group has no effect on the direction of VTC Telecommunicatio i.e., VTC Telecommunicatio and Sao Mai go up and down completely randomly.

Pair Corralation between VTC Telecommunicatio and Sao Mai

Assuming the 90 days trading horizon VTC Telecommunications JSC is expected to generate 2.3 times more return on investment than Sao Mai. However, VTC Telecommunicatio is 2.3 times more volatile than Sao Mai Group. It trades about 0.05 of its potential returns per unit of risk. Sao Mai Group is currently generating about -0.04 per unit of risk. If you would invest  850,000  in VTC Telecommunications JSC on December 1, 2024 and sell it today you would earn a total of  50,000  from holding VTC Telecommunications JSC or generate 5.88% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	91.67%
Values	Daily Returns

VTC Telecommunications JSC  vs.  Sao Mai Group

VTC Telecommunications

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in VTC Telecommunications JSC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, VTC Telecommunicatio may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sao Mai Group

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sao Mai Group has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy primary indicators, Sao Mai is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VTC Telecommunicatio and Sao Mai

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

The idea behind VTC Telecommunications JSC and Sao Mai Group 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.