Correlation Between Vietnam Airlines and Thanh Dat
Can any of the company-specific risk be diversified away by investing in both Vietnam Airlines and Thanh Dat 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 Airlines and Thanh Dat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam Airlines JSC and Thanh Dat Investment, you can compare the effects of market volatilities on Vietnam Airlines and Thanh Dat 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 Airlines with a short position of Thanh Dat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Airlines and Thanh Dat.
Diversification Opportunities for Vietnam Airlines and Thanh Dat
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vietnam and Thanh is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Airlines JSC and Thanh Dat Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Dat Investment and Vietnam Airlines 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 Airlines JSC are associated (or correlated) with Thanh Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Dat Investment has no effect on the direction of Vietnam Airlines i.e., Vietnam Airlines and Thanh Dat go up and down completely randomly.
Pair Corralation between Vietnam Airlines and Thanh Dat
Assuming the 90 days trading horizon Vietnam Airlines JSC is expected to generate 1.18 times more return on investment than Thanh Dat. However, Vietnam Airlines is 1.18 times more volatile than Thanh Dat Investment. It trades about 0.31 of its potential returns per unit of risk. Thanh Dat Investment is currently generating about 0.06 per unit of risk. If you would invest 2,235,000 in Vietnam Airlines JSC on August 31, 2024 and sell it today you would earn a total of 505,000 from holding Vietnam Airlines JSC or generate 22.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Airlines JSC vs. Thanh Dat Investment
Performance |
| Timeline |
| Vietnam Airlines JSC |
| Thanh Dat Investment |
Vietnam Airlines and Thanh Dat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Airlines and Thanh Dat
The main advantage of trading using opposite Vietnam Airlines and Thanh Dat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Airlines position performs unexpectedly, Thanh Dat 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 Thanh Dat will offset losses from the drop in Thanh Dat's long position.| Vietnam Airlines vs. Song Hong Garment | Vietnam Airlines vs. Alphanam ME | Vietnam Airlines vs. Hochiminh City Metal | Vietnam Airlines vs. Atesco Industrial Cartering |
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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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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