Correlation Between Viet Thanh and Vietnam Rubber

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

Diversification Opportunities for Viet Thanh and Vietnam Rubber

-0.07

Correlation Coefficient

Viet Thanh  Vietnam Rubber

Good diversification

The 3 months correlation between Viet and Vietnam is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Viet Thanh Plastic and Vietnam Rubber Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Rubber Group 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 Vietnam Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Rubber Group has no effect on the direction of Viet Thanh i.e., Viet Thanh and Vietnam Rubber go up and down completely randomly.

Pair Corralation between Viet Thanh and Vietnam Rubber

Assuming the 90 days trading horizon Viet Thanh Plastic is expected to generate 1.21 times more return on investment than Vietnam Rubber. However, Viet Thanh is 1.21 times more volatile than Vietnam Rubber Group. It trades about 0.15 of its potential returns per unit of risk. Vietnam Rubber Group is currently generating about -0.07 per unit of risk. If you would invest  1,133,929  in Viet Thanh Plastic on October 7, 2024 and sell it today you would earn a total of  626,071  from holding Viet Thanh Plastic or generate 55.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	99.21%
Values	Daily Returns

Viet Thanh Plastic  vs.  Vietnam Rubber Group

Viet Thanh Plastic

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Viet Thanh Plastic are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Viet Thanh may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Vietnam Rubber Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vietnam Rubber Group 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 Viet Thanh and Vietnam Rubber

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

The idea behind Viet Thanh Plastic and Vietnam Rubber 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.

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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.