Correlation Between Vietnam Rubber and An Phat
Can any of the company-specific risk be diversified away by investing in both Vietnam Rubber and An Phat 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 Rubber and An Phat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam Rubber Group and An Phat Plastic, you can compare the effects of market volatilities on Vietnam Rubber and An Phat 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 Rubber with a short position of An Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Rubber and An Phat.
Diversification Opportunities for Vietnam Rubber and An Phat
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vietnam and AAA is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Rubber Group and An Phat Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Phat Plastic and Vietnam Rubber 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 Rubber Group are associated (or correlated) with An Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Phat Plastic has no effect on the direction of Vietnam Rubber i.e., Vietnam Rubber and An Phat go up and down completely randomly.
Pair Corralation between Vietnam Rubber and An Phat
Assuming the 90 days trading horizon Vietnam Rubber Group is expected to generate 1.35 times more return on investment than An Phat. However, Vietnam Rubber is 1.35 times more volatile than An Phat Plastic. It trades about -0.02 of its potential returns per unit of risk. An Phat Plastic is currently generating about -0.13 per unit of risk. If you would invest 3,482,604 in Vietnam Rubber Group on September 3, 2024 and sell it today you would lose (337,604) from holding Vietnam Rubber Group or give up 9.69% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Rubber Group vs. An Phat Plastic
Performance |
| Timeline |
| Vietnam Rubber Group |
| An Phat Plastic |
Vietnam Rubber and An Phat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Rubber and An Phat
The main advantage of trading using opposite Vietnam Rubber and An Phat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Rubber position performs unexpectedly, An Phat 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 An Phat will offset losses from the drop in An Phat's long position.| Vietnam Rubber vs. Development Investment Construction | Vietnam Rubber vs. Agriculture Printing and | Vietnam Rubber vs. Nafoods Group JSC | Vietnam Rubber vs. FPT Digital Retail |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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