Correlation Between Hanoi Plastics and Viet Thanh
Can any of the company-specific risk be diversified away by investing in both Hanoi Plastics and Viet Thanh 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 Hanoi Plastics and Viet Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanoi Plastics JSC and Viet Thanh Plastic, you can compare the effects of market volatilities on Hanoi Plastics and Viet Thanh 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 Hanoi Plastics with a short position of Viet Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanoi Plastics and Viet Thanh.
Diversification Opportunities for Hanoi Plastics and Viet Thanh
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hanoi and Viet is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Hanoi Plastics JSC and Viet Thanh Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viet Thanh Plastic and Hanoi Plastics 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 Hanoi Plastics JSC are associated (or correlated) with Viet Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viet Thanh Plastic has no effect on the direction of Hanoi Plastics i.e., Hanoi Plastics and Viet Thanh go up and down completely randomly.
Pair Corralation between Hanoi Plastics and Viet Thanh
Assuming the 90 days trading horizon Hanoi Plastics is expected to generate 7.52 times less return on investment than Viet Thanh. But when comparing it to its historical volatility, Hanoi Plastics JSC is 1.32 times less risky than Viet Thanh. It trades about 0.01 of its potential returns per unit of risk. Viet Thanh Plastic is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 680,000 in Viet Thanh Plastic on August 28, 2024 and sell it today you would earn a total of 900,000 from holding Viet Thanh Plastic or generate 132.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 97.56% |
| Values | Daily Returns |
Hanoi Plastics JSC vs. Viet Thanh Plastic
Performance |
| Timeline |
| Hanoi Plastics JSC |
| Viet Thanh Plastic |
Hanoi Plastics and Viet Thanh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanoi Plastics and Viet Thanh
The main advantage of trading using opposite Hanoi Plastics and Viet Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanoi Plastics position performs unexpectedly, Viet Thanh 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 Viet Thanh will offset losses from the drop in Viet Thanh's long position.| Hanoi Plastics vs. FIT INVEST JSC | Hanoi Plastics vs. Damsan JSC | Hanoi Plastics vs. An Phat Plastic | Hanoi Plastics vs. APG Securities Joint |
| Viet Thanh vs. FIT INVEST JSC | Viet Thanh vs. Damsan JSC | Viet Thanh vs. An Phat Plastic | Viet Thanh 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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