Correlation Between Elcom Technology and VN Index
Can any of the company-specific risk be diversified away by investing in both Elcom Technology and VN Index 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 Elcom Technology and VN Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Elcom Technology Communications and VN Index, you can compare the effects of market volatilities on Elcom Technology and VN Index 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 Elcom Technology with a short position of VN Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Elcom Technology and VN Index.
Diversification Opportunities for Elcom Technology and VN Index
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Elcom and VNI is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Elcom Technology Communication and VN Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VN Index and Elcom Technology 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 Elcom Technology Communications are associated (or correlated) with VN Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VN Index has no effect on the direction of Elcom Technology i.e., Elcom Technology and VN Index go up and down completely randomly.
Pair Corralation between Elcom Technology and VN Index
Assuming the 90 days trading horizon Elcom Technology Communications is expected to generate 2.5 times more return on investment than VN Index. However, Elcom Technology is 2.5 times more volatile than VN Index. It trades about 0.13 of its potential returns per unit of risk. VN Index is currently generating about 0.08 per unit of risk. If you would invest 2,185,000 in Elcom Technology Communications on November 3, 2024 and sell it today you would earn a total of 600,000 from holding Elcom Technology Communications or generate 27.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.19% |
| Values | Daily Returns |
Elcom Technology Communication vs. VN Index
Performance |
| Timeline |
Elcom Technology and VN Index Volatility Contrast
Predicted Return Density |
| Returns |
Elcom Technology Communications
Pair trading matchups for Elcom Technology
VN Index
Pair trading matchups for VN Index
Pair Trading with Elcom Technology and VN Index
The main advantage of trading using opposite Elcom Technology and VN Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Elcom Technology position performs unexpectedly, VN Index 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 VN Index will offset losses from the drop in VN Index's long position.| Elcom Technology vs. Song Hong Aluminum | Elcom Technology vs. Vietnam Technological And | Elcom Technology vs. Transport and Industry | Elcom Technology vs. Vietnam Rubber Group |
| VN Index vs. Vnsteel Vicasa JSC | VN Index vs. Hanoi Beer Alcohol | VN Index vs. Everland Investment JSC | VN Index vs. Thanh Dat 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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