Correlation Between VTC Telecommunicatio and Viet Nam

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

Diversification Opportunities for VTC Telecommunicatio and Viet Nam

-0.03

Correlation Coefficient

VTC Telecommunicatio  Viet Nam

Good diversification

The 3 months correlation between VTC and Viet is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding VTC Telecommunications JSC and Viet Nam Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viet Nam Construction 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 Viet Nam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viet Nam Construction has no effect on the direction of VTC Telecommunicatio i.e., VTC Telecommunicatio and Viet Nam go up and down completely randomly.

Pair Corralation between VTC Telecommunicatio and Viet Nam

Assuming the 90 days trading horizon VTC Telecommunications JSC is expected to generate 2.88 times more return on investment than Viet Nam. However, VTC Telecommunicatio is 2.88 times more volatile than Viet Nam Construction. It trades about 0.28 of its potential returns per unit of risk. Viet Nam Construction is currently generating about 0.08 per unit of risk. If you would invest  830,000  in VTC Telecommunications JSC on October 26, 2024 and sell it today you would earn a total of  120,000  from holding VTC Telecommunications JSC or generate 14.46% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	57.89%
Values	Daily Returns

VTC Telecommunications JSC  vs.  Viet Nam Construction

VTC Telecommunications

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VTC Telecommunications JSC are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, VTC Telecommunicatio displayed solid returns over the last few months and may actually be approaching a breakup point.

Viet Nam Construction

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viet Nam Construction has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with VTC Telecommunicatio and Viet Nam

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

The idea behind VTC Telecommunications JSC and Viet Nam Construction 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.

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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.