Correlation Between Hochiminh City and Vu Dang
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Vu Dang 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 Vu Dang 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 Vu Dang Investment, you can compare the effects of market volatilities on Hochiminh City and Vu Dang 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 Vu Dang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Vu Dang.
Diversification Opportunities for Hochiminh City and Vu Dang
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hochiminh and SVD is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Vu Dang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vu Dang Investment 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 Vu Dang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vu Dang Investment has no effect on the direction of Hochiminh City i.e., Hochiminh City and Vu Dang go up and down completely randomly.
Pair Corralation between Hochiminh City and Vu Dang
Assuming the 90 days trading horizon Hochiminh City is expected to generate 1.65 times less return on investment than Vu Dang. But when comparing it to its historical volatility, Hochiminh City Metal is 2.59 times less risky than Vu Dang. It trades about 0.17 of its potential returns per unit of risk. Vu Dang Investment is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 325,000 in Vu Dang Investment on September 15, 2024 and sell it today you would earn a total of 20,000 from holding Vu Dang Investment or generate 6.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochiminh City Metal vs. Vu Dang Investment
Performance |
| Timeline |
| Hochiminh City Metal |
| Vu Dang Investment |
Hochiminh City and Vu Dang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Vu Dang
The main advantage of trading using opposite Hochiminh City and Vu Dang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Vu Dang 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 Vu Dang will offset losses from the drop in Vu Dang's long position.| Hochiminh City vs. Saigon Viendong Technology | Hochiminh City vs. PetroVietnam Drilling Well | Hochiminh City vs. Post and Telecommunications | Hochiminh City vs. PVI Reinsurance Corp |
| Vu Dang vs. Truong Thanh Furniture | Vu Dang vs. Hochiminh City Metal | Vu Dang vs. Fecon Mining JSC | Vu Dang vs. Southern Rubber Industry |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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