Correlation Between Vietnam Rubber and Phuoc Hoa
Can any of the company-specific risk be diversified away by investing in both Vietnam Rubber and Phuoc Hoa 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 Phuoc Hoa 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 Phuoc Hoa Rubber, you can compare the effects of market volatilities on Vietnam Rubber and Phuoc Hoa 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 Phuoc Hoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Rubber and Phuoc Hoa.
Diversification Opportunities for Vietnam Rubber and Phuoc Hoa
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vietnam and Phuoc is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Rubber Group and Phuoc Hoa Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phuoc Hoa Rubber 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 Phuoc Hoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phuoc Hoa Rubber has no effect on the direction of Vietnam Rubber i.e., Vietnam Rubber and Phuoc Hoa go up and down completely randomly.
Pair Corralation between Vietnam Rubber and Phuoc Hoa
Assuming the 90 days trading horizon Vietnam Rubber Group is expected to under-perform the Phuoc Hoa. In addition to that, Vietnam Rubber is 1.25 times more volatile than Phuoc Hoa Rubber. It trades about -0.25 of its total potential returns per unit of risk. Phuoc Hoa Rubber is currently generating about -0.2 per unit of volatility. If you would invest 5,360,000 in Phuoc Hoa Rubber on October 22, 2024 and sell it today you would lose (230,000) from holding Phuoc Hoa Rubber or give up 4.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Vietnam Rubber Group vs. Phuoc Hoa Rubber
Performance |
| Timeline |
| Vietnam Rubber Group |
| Phuoc Hoa Rubber |
Vietnam Rubber and Phuoc Hoa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Rubber and Phuoc Hoa
The main advantage of trading using opposite Vietnam Rubber and Phuoc Hoa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Rubber position performs unexpectedly, Phuoc Hoa 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 Phuoc Hoa will offset losses from the drop in Phuoc Hoa's long position.| Vietnam Rubber vs. Din Capital Investment | Vietnam Rubber vs. Saigon Beer Alcohol | Vietnam Rubber vs. Tien Giang Investment | Vietnam Rubber vs. Bao Ngoc Investment |
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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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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