Correlation Between Vietnam Rubber and Foreign Trade
Can any of the company-specific risk be diversified away by investing in both Vietnam Rubber and Foreign Trade 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 Foreign Trade 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 Foreign Trade Development, you can compare the effects of market volatilities on Vietnam Rubber and Foreign Trade 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 Foreign Trade. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Rubber and Foreign Trade.
Diversification Opportunities for Vietnam Rubber and Foreign Trade
-0.72 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vietnam and Foreign is -0.72. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Rubber Group and Foreign Trade Development in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Foreign Trade Development 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 Foreign Trade. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Foreign Trade Development has no effect on the direction of Vietnam Rubber i.e., Vietnam Rubber and Foreign Trade go up and down completely randomly.
Pair Corralation between Vietnam Rubber and Foreign Trade
Assuming the 90 days trading horizon Vietnam Rubber Group is expected to under-perform the Foreign Trade. But the stock apears to be less risky and, when comparing its historical volatility, Vietnam Rubber Group is 1.17 times less risky than Foreign Trade. The stock trades about -0.12 of its potential returns per unit of risk. The Foreign Trade Development is currently generating about 0.33 of returns per unit of risk over similar time horizon. If you would invest 1,500,000 in Foreign Trade Development on August 27, 2024 and sell it today you would earn a total of 100,000 from holding Foreign Trade Development or generate 6.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 42.86% |
| Values | Daily Returns |
Vietnam Rubber Group vs. Foreign Trade Development
Performance |
| Timeline |
| Vietnam Rubber Group |
| Foreign Trade Development |
Vietnam Rubber and Foreign Trade Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Rubber and Foreign Trade
The main advantage of trading using opposite Vietnam Rubber and Foreign Trade positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Rubber position performs unexpectedly, Foreign Trade 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 Foreign Trade will offset losses from the drop in Foreign Trade's long position.| Vietnam Rubber vs. FIT INVEST JSC | Vietnam Rubber vs. Damsan JSC | Vietnam Rubber vs. An Phat Plastic | Vietnam Rubber vs. APG Securities Joint |
| Foreign Trade vs. Military Insurance Corp | Foreign Trade vs. BIDV Insurance Corp | Foreign Trade vs. FPT Digital Retail | Foreign Trade vs. Saigon Viendong Technology |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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