Correlation Between Vietnam Rubber and Hanoi Plastics
Can any of the company-specific risk be diversified away by investing in both Vietnam Rubber and Hanoi Plastics 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 Hanoi Plastics 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 Hanoi Plastics JSC, you can compare the effects of market volatilities on Vietnam Rubber and Hanoi Plastics 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 Hanoi Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Rubber and Hanoi Plastics.
Diversification Opportunities for Vietnam Rubber and Hanoi Plastics
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vietnam and Hanoi is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Rubber Group and Hanoi Plastics JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Plastics JSC 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 Hanoi Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Plastics JSC has no effect on the direction of Vietnam Rubber i.e., Vietnam Rubber and Hanoi Plastics go up and down completely randomly.
Pair Corralation between Vietnam Rubber and Hanoi Plastics
Assuming the 90 days trading horizon Vietnam Rubber Group is expected to generate 1.15 times more return on investment than Hanoi Plastics. However, Vietnam Rubber is 1.15 times more volatile than Hanoi Plastics JSC. It trades about 0.08 of its potential returns per unit of risk. Hanoi Plastics JSC is currently generating about 0.01 per unit of risk. If you would invest 1,362,200 in Vietnam Rubber Group on August 28, 2024 and sell it today you would earn a total of 1,722,800 from holding Vietnam Rubber Group or generate 126.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Rubber Group vs. Hanoi Plastics JSC
Performance |
| Timeline |
| Vietnam Rubber Group |
| Hanoi Plastics JSC |
Vietnam Rubber and Hanoi Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Rubber and Hanoi Plastics
The main advantage of trading using opposite Vietnam Rubber and Hanoi Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Rubber position performs unexpectedly, Hanoi Plastics 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 Hanoi Plastics will offset losses from the drop in Hanoi Plastics' 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 |
| Hanoi Plastics vs. FIT INVEST JSC | Hanoi Plastics vs. Damsan JSC | Hanoi Plastics vs. An Phat Plastic | Hanoi Plastics vs. APG Securities Joint |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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