Correlation Between Vietnam JSCmmercial and Tienlen Steel
Can any of the company-specific risk be diversified away by investing in both Vietnam JSCmmercial and Tienlen Steel 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 Vietnam JSCmmercial and Tienlen Steel into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam JSCmmercial Bank and Tienlen Steel Corp, you can compare the effects of market volatilities on Vietnam JSCmmercial and Tienlen Steel 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 Vietnam JSCmmercial with a short position of Tienlen Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam JSCmmercial and Tienlen Steel.
Diversification Opportunities for Vietnam JSCmmercial and Tienlen Steel
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Vietnam and Tienlen is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam JSCmmercial Bank and Tienlen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tienlen Steel Corp and Vietnam JSCmmercial 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 Vietnam JSCmmercial Bank are associated (or correlated) with Tienlen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tienlen Steel Corp has no effect on the direction of Vietnam JSCmmercial i.e., Vietnam JSCmmercial and Tienlen Steel go up and down completely randomly.
Pair Corralation between Vietnam JSCmmercial and Tienlen Steel
Assuming the 90 days trading horizon Vietnam JSCmmercial Bank is expected to generate 0.8 times more return on investment than Tienlen Steel. However, Vietnam JSCmmercial Bank is 1.25 times less risky than Tienlen Steel. It trades about -0.01 of its potential returns per unit of risk. Tienlen Steel Corp is currently generating about -0.24 per unit of risk. If you would invest 3,810,000 in Vietnam JSCmmercial Bank on November 3, 2024 and sell it today you would lose (10,000) from holding Vietnam JSCmmercial Bank or give up 0.26% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam JSCmmercial Bank vs. Tienlen Steel Corp
Performance |
| Timeline |
| Vietnam JSCmmercial Bank |
| Tienlen Steel Corp |
Vietnam JSCmmercial and Tienlen Steel Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam JSCmmercial and Tienlen Steel
The main advantage of trading using opposite Vietnam JSCmmercial and Tienlen Steel positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam JSCmmercial position performs unexpectedly, Tienlen Steel 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 Tienlen Steel will offset losses from the drop in Tienlen Steel's long position.| Vietnam JSCmmercial vs. Telecoms Informatics JSC | Vietnam JSCmmercial vs. Tin Nghia Industrial | Vietnam JSCmmercial vs. Investment and Industrial | Vietnam JSCmmercial vs. Tienlen Steel Corp |
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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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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