Correlation Between FPT Digital and Vietnam Rubber
Can any of the company-specific risk be diversified away by investing in both FPT Digital 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 FPT Digital and Vietnam Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FPT Digital Retail and Vietnam Rubber Group, you can compare the effects of market volatilities on FPT Digital 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 FPT Digital with a short position of Vietnam Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT Digital and Vietnam Rubber.
Diversification Opportunities for FPT Digital and Vietnam Rubber
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between FPT and Vietnam is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding FPT Digital Retail 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 FPT Digital 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 FPT Digital Retail 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 FPT Digital i.e., FPT Digital and Vietnam Rubber go up and down completely randomly.
Pair Corralation between FPT Digital and Vietnam Rubber
Assuming the 90 days trading horizon FPT Digital Retail is expected to generate 0.71 times more return on investment than Vietnam Rubber. However, FPT Digital Retail is 1.41 times less risky than Vietnam Rubber. It trades about 0.14 of its potential returns per unit of risk. Vietnam Rubber Group is currently generating about 0.06 per unit of risk. If you would invest 7,650,000 in FPT Digital Retail on September 12, 2024 and sell it today you would earn a total of 10,540,000 from holding FPT Digital Retail or generate 137.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
FPT Digital Retail vs. Vietnam Rubber Group
Performance |
| Timeline |
| FPT Digital Retail |
| Vietnam Rubber Group |
FPT Digital and Vietnam Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FPT Digital and Vietnam Rubber
The main advantage of trading using opposite FPT Digital and Vietnam Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FPT Digital 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.| FPT Digital vs. FIT INVEST JSC | FPT Digital vs. Damsan JSC | FPT Digital vs. An Phat Plastic | FPT Digital vs. Alphanam ME |
| Vietnam Rubber vs. FPT Digital Retail | Vietnam Rubber vs. Educational Book In | Vietnam Rubber vs. Truong Thanh Furniture | Vietnam Rubber vs. Viettel Construction JSC |
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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