Correlation Between Hochiminh City and Vietnam National
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Vietnam National 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 National 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 National Reinsurance, you can compare the effects of market volatilities on Hochiminh City and Vietnam National 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 National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Vietnam National.
Diversification Opportunities for Hochiminh City and Vietnam National
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hochiminh and Vietnam is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Vietnam National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam National Rei 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 National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam National Rei has no effect on the direction of Hochiminh City i.e., Hochiminh City and Vietnam National go up and down completely randomly.
Pair Corralation between Hochiminh City and Vietnam National
Assuming the 90 days trading horizon Hochiminh City Metal is expected to under-perform the Vietnam National. In addition to that, Hochiminh City is 1.33 times more volatile than Vietnam National Reinsurance. It trades about -0.05 of its total potential returns per unit of risk. Vietnam National Reinsurance is currently generating about 0.04 per unit of volatility. If you would invest 2,290,000 in Vietnam National Reinsurance on August 28, 2024 and sell it today you would earn a total of 10,000 from holding Vietnam National Reinsurance or generate 0.44% 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. Vietnam National Reinsurance
Performance |
| Timeline |
| Hochiminh City Metal |
| Vietnam National Rei |
Hochiminh City and Vietnam National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Vietnam National
The main advantage of trading using opposite Hochiminh City and Vietnam National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Vietnam National 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 National will offset losses from the drop in Vietnam National's long position.| Hochiminh City vs. Tri Viet Management | Hochiminh City vs. Tay Ninh Rubber | Hochiminh City vs. Hanoi Plastics JSC | Hochiminh City vs. Post and Telecommunications |
| Vietnam National vs. FIT INVEST JSC | Vietnam National vs. Damsan JSC | Vietnam National vs. An Phat Plastic | Vietnam National 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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