Correlation Between Viet Thanh and FIT INVEST

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

By analyzing existing cross correlation between Viet Thanh Plastic and FIT INVEST JSC, you can compare the effects of market volatilities on Viet Thanh and FIT INVEST 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 Viet Thanh with a short position of FIT INVEST. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viet Thanh and FIT INVEST.

Diversification Opportunities for Viet Thanh and FIT INVEST

-0.12

Correlation Coefficient

Viet Thanh  FIT INVEST

Good diversification

The 3 months correlation between Viet and FIT is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Viet Thanh Plastic and FIT INVEST JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FIT INVEST JSC and Viet Thanh 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 Viet Thanh Plastic are associated (or correlated) with FIT INVEST. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FIT INVEST JSC has no effect on the direction of Viet Thanh i.e., Viet Thanh and FIT INVEST go up and down completely randomly.

Pair Corralation between Viet Thanh and FIT INVEST

Assuming the 90 days trading horizon Viet Thanh Plastic is expected to generate 1.58 times more return on investment than FIT INVEST. However, Viet Thanh is 1.58 times more volatile than FIT INVEST JSC. It trades about 0.13 of its potential returns per unit of risk. FIT INVEST JSC is currently generating about 0.0 per unit of risk. If you would invest  1,490,000  in Viet Thanh Plastic on September 12, 2024 and sell it today you would earn a total of  270,000  from holding Viet Thanh Plastic or generate 18.12% return on investment over 90 days.

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

Viet Thanh Plastic  vs.  FIT INVEST JSC

Viet Thanh Plastic

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Viet Thanh Plastic are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Viet Thanh displayed solid returns over the last few months and may actually be approaching a breakup point.

FIT INVEST JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Viet Thanh and FIT INVEST

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

The idea behind Viet Thanh Plastic and FIT INVEST JSC 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..