Correlation Between VTC Telecommunicatio and Thanh Dat

Can any of the company-specific risk be diversified away by investing in both VTC Telecommunicatio 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 VTC Telecommunicatio and Thanh Dat 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 Thanh Dat Investment, you can compare the effects of market volatilities on VTC Telecommunicatio 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 VTC Telecommunicatio with a short position of Thanh Dat. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTC Telecommunicatio and Thanh Dat.

Diversification Opportunities for VTC Telecommunicatio and Thanh Dat

0.08

Correlation Coefficient

VTC Telecommunicatio  Thanh Dat

Significant diversification

The 3 months correlation between VTC and Thanh is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding VTC Telecommunications JSC 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 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 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 VTC Telecommunicatio i.e., VTC Telecommunicatio and Thanh Dat go up and down completely randomly.

Pair Corralation between VTC Telecommunicatio and Thanh Dat

Assuming the 90 days trading horizon VTC Telecommunications JSC is expected to under-perform the Thanh Dat. But the stock apears to be less risky and, when comparing its historical volatility, VTC Telecommunications JSC is 1.35 times less risky than Thanh Dat. The stock trades about -0.1 of its potential returns per unit of risk. The Thanh Dat Investment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  2,750,000  in Thanh Dat Investment on September 14, 2024 and sell it today you would lose (60,000) from holding Thanh Dat Investment or give up 2.18% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

VTC Telecommunications JSC  vs.  Thanh Dat Investment

VTC Telecommunications

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VTC Telecommunications JSC are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, VTC Telecommunicatio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Thanh Dat Investment

Risk-Adjusted Performance

7 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Thanh Dat Investment are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Thanh Dat displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VTC Telecommunicatio and Thanh Dat

The main advantage of trading using opposite VTC Telecommunicatio and Thanh Dat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VTC Telecommunicatio 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 VTC Telecommunications JSC 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.