Correlation Between Transport and VN Index
Can any of the company-specific risk be diversified away by investing in both Transport and VN Index 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 Transport and VN Index into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transport and Industry and VN Index, you can compare the effects of market volatilities on Transport and VN Index 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 Transport with a short position of VN Index. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transport and VN Index.
Diversification Opportunities for Transport and VN Index
Very weak diversification
The 3 months correlation between Transport and VNI is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Transport and Industry and VN Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VN Index and Transport 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 Transport and Industry are associated (or correlated) with VN Index. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VN Index has no effect on the direction of Transport i.e., Transport and VN Index go up and down completely randomly.
Pair Corralation between Transport and VN Index
Assuming the 90 days trading horizon Transport and Industry is expected to under-perform the VN Index. In addition to that, Transport is 2.8 times more volatile than VN Index. It trades about -0.16 of its total potential returns per unit of risk. VN Index is currently generating about 0.04 per unit of volatility. If you would invest 124,471 in VN Index on September 4, 2024 and sell it today you would earn a total of 611.00 from holding VN Index or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Transport and Industry vs. VN Index
Performance |
| Timeline |
Transport and VN Index Volatility Contrast
Predicted Return Density |
| Returns |
Transport and Industry
Pair trading matchups for Transport
VN Index
Pair trading matchups for VN Index
Pair Trading with Transport and VN Index
The main advantage of trading using opposite Transport and VN Index positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transport position performs unexpectedly, VN Index 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 VN Index will offset losses from the drop in VN Index's long position.| Transport vs. FIT INVEST JSC | Transport vs. Damsan JSC | Transport vs. An Phat Plastic | Transport vs. Alphanam ME |
| VN Index vs. Fecon Mining JSC | VN Index vs. Elcom Technology Communications | VN Index vs. Pacific Petroleum Transportation | VN Index vs. Transport and 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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