Correlation Between Development Investment and Vietnam National
Can any of the company-specific risk be diversified away by investing in both Development Investment and Vietnam National 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 Development Investment and Vietnam National into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Development Investment Construction and Vietnam National Reinsurance, you can compare the effects of market volatilities on Development Investment and Vietnam National 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 Development Investment with a short position of Vietnam National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Development Investment and Vietnam National.
Diversification Opportunities for Development Investment and Vietnam National
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Development and Vietnam is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Development Investment Constru and Vietnam National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam National Rei and Development Investment 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 Development Investment Construction are associated (or correlated) with Vietnam National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam National Rei has no effect on the direction of Development Investment i.e., Development Investment and Vietnam National go up and down completely randomly.
Pair Corralation between Development Investment and Vietnam National
Assuming the 90 days trading horizon Development Investment Construction is expected to under-perform the Vietnam National. In addition to that, Development Investment is 4.94 times more volatile than Vietnam National Reinsurance. It trades about -0.02 of its total potential returns per unit of risk. Vietnam National Reinsurance is currently generating about -0.04 per unit of volatility. If you would invest 2,300,000 in Vietnam National Reinsurance on September 1, 2024 and sell it today you would lose (10,000) from holding Vietnam National Reinsurance or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 77.27% |
| Values | Daily Returns |
Development Investment Constru vs. Vietnam National Reinsurance
Performance |
| Timeline |
| Development Investment |
| Vietnam National Rei |
Development Investment and Vietnam National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Development Investment and Vietnam National
The main advantage of trading using opposite Development Investment and Vietnam National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Development Investment position performs unexpectedly, Vietnam National 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 National will offset losses from the drop in Vietnam National's long position.| Development Investment vs. FIT INVEST JSC | Development Investment vs. Damsan JSC | Development Investment vs. An Phat Plastic | Development Investment vs. Alphanam ME |
| Vietnam National vs. Vietnam Airlines JSC | Vietnam National vs. Development Investment Construction | Vietnam National vs. Military Insurance Corp | Vietnam National vs. Petrolimex International Trading |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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