Correlation Between Vietnam Rubber and Development Investment
Can any of the company-specific risk be diversified away by investing in both Vietnam Rubber and Development Investment 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 Development Investment 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 Development Investment Construction, you can compare the effects of market volatilities on Vietnam Rubber and Development Investment 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 Development Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Rubber and Development Investment.
Diversification Opportunities for Vietnam Rubber and Development Investment
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vietnam and Development is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Rubber Group and Development Investment Constru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Development Investment 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 Development Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Development Investment has no effect on the direction of Vietnam Rubber i.e., Vietnam Rubber and Development Investment go up and down completely randomly.
Pair Corralation between Vietnam Rubber and Development Investment
Assuming the 90 days trading horizon Vietnam Rubber Group is expected to generate 0.98 times more return on investment than Development Investment. However, Vietnam Rubber Group is 1.02 times less risky than Development Investment. It trades about 0.08 of its potential returns per unit of risk. Development Investment Construction is currently generating about -0.04 per unit of risk. If you would invest 2,016,244 in Vietnam Rubber Group on September 4, 2024 and sell it today you would earn a total of 1,128,756 from holding Vietnam Rubber Group or generate 55.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 91.43% |
| Values | Daily Returns |
Vietnam Rubber Group vs. Development Investment Constru
Performance |
| Timeline |
| Vietnam Rubber Group |
| Development Investment |
Vietnam Rubber and Development Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Rubber and Development Investment
The main advantage of trading using opposite Vietnam Rubber and Development Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Rubber position performs unexpectedly, Development Investment 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 Development Investment will offset losses from the drop in Development Investment's long position.| Vietnam Rubber vs. Hanoi Plastics JSC | Vietnam Rubber vs. Danang Education Investment | Vietnam Rubber vs. VTC Telecommunications JSC | Vietnam Rubber vs. Vietnam Technological And |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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