Correlation Between Vietnam Rubber and Hochiminh City
Can any of the company-specific risk be diversified away by investing in both Vietnam Rubber and Hochiminh City 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 Hochiminh City 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 Hochiminh City Metal, you can compare the effects of market volatilities on Vietnam Rubber and Hochiminh City 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 Hochiminh City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Rubber and Hochiminh City.
Diversification Opportunities for Vietnam Rubber and Hochiminh City
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Vietnam and Hochiminh is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Rubber Group and Hochiminh City Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochiminh City Metal 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 Hochiminh City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochiminh City Metal has no effect on the direction of Vietnam Rubber i.e., Vietnam Rubber and Hochiminh City go up and down completely randomly.
Pair Corralation between Vietnam Rubber and Hochiminh City
Assuming the 90 days trading horizon Vietnam Rubber Group is expected to generate 1.79 times more return on investment than Hochiminh City. However, Vietnam Rubber is 1.79 times more volatile than Hochiminh City Metal. It trades about 0.07 of its potential returns per unit of risk. Hochiminh City Metal is currently generating about 0.04 per unit of risk. If you would invest 1,440,040 in Vietnam Rubber Group on September 2, 2024 and sell it today you would earn a total of 1,689,960 from holding Vietnam Rubber Group or generate 117.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Rubber Group vs. Hochiminh City Metal
Performance |
| Timeline |
| Vietnam Rubber Group |
| Hochiminh City Metal |
Vietnam Rubber and Hochiminh City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Rubber and Hochiminh City
The main advantage of trading using opposite Vietnam Rubber and Hochiminh City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Rubber position performs unexpectedly, Hochiminh City 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 Hochiminh City will offset losses from the drop in Hochiminh City's long position.| Vietnam Rubber vs. Pha Lai Thermal | Vietnam Rubber vs. BIDV Insurance Corp | Vietnam Rubber vs. Telecoms Informatics JSC | Vietnam Rubber vs. Hochiminh City Metal |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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