Correlation Between Hochiminh City and Vietnam Medicinal
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Vietnam Medicinal 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 Hochiminh City and Vietnam Medicinal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hochiminh City Metal and Vietnam Medicinal Materials, you can compare the effects of market volatilities on Hochiminh City and Vietnam Medicinal 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 Hochiminh City with a short position of Vietnam Medicinal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Vietnam Medicinal.
Diversification Opportunities for Hochiminh City and Vietnam Medicinal
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hochiminh and Vietnam is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Vietnam Medicinal Materials in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Medicinal and Hochiminh City 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 Hochiminh City Metal are associated (or correlated) with Vietnam Medicinal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Medicinal has no effect on the direction of Hochiminh City i.e., Hochiminh City and Vietnam Medicinal go up and down completely randomly.
Pair Corralation between Hochiminh City and Vietnam Medicinal
Assuming the 90 days trading horizon Hochiminh City Metal is expected to generate 0.58 times more return on investment than Vietnam Medicinal. However, Hochiminh City Metal is 1.73 times less risky than Vietnam Medicinal. It trades about 0.28 of its potential returns per unit of risk. Vietnam Medicinal Materials is currently generating about -0.18 per unit of risk. If you would invest 1,090,000 in Hochiminh City Metal on September 14, 2024 and sell it today you would earn a total of 70,000 from holding Hochiminh City Metal or generate 6.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochiminh City Metal vs. Vietnam Medicinal Materials
Performance |
| Timeline |
| Hochiminh City Metal |
| Vietnam Medicinal |
Hochiminh City and Vietnam Medicinal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Vietnam Medicinal
The main advantage of trading using opposite Hochiminh City and Vietnam Medicinal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Vietnam Medicinal 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 Vietnam Medicinal will offset losses from the drop in Vietnam Medicinal's long position.| Hochiminh City vs. FIT INVEST JSC | Hochiminh City vs. Damsan JSC | Hochiminh City vs. An Phat Plastic | Hochiminh City vs. Alphanam ME |
| Vietnam Medicinal vs. Song Hong Garment | Vietnam Medicinal vs. Alphanam ME | Vietnam Medicinal vs. Hochiminh City Metal | Vietnam Medicinal vs. Atesco Industrial Cartering |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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