Correlation Between Truong Thanh and Vietnam Rubber
Can any of the company-specific risk be diversified away by investing in both Truong Thanh and Vietnam Rubber 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 Truong Thanh and Vietnam Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truong Thanh Furniture and Vietnam Rubber Group, you can compare the effects of market volatilities on Truong Thanh and Vietnam Rubber 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 Truong Thanh with a short position of Vietnam Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truong Thanh and Vietnam Rubber.
Diversification Opportunities for Truong Thanh and Vietnam Rubber
0.58 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Truong and Vietnam is 0.58. Overlapping area represents the amount of risk that can be diversified away by holding Truong Thanh Furniture and Vietnam Rubber Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Rubber Group and Truong Thanh 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 Truong Thanh Furniture are associated (or correlated) with Vietnam Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Rubber Group has no effect on the direction of Truong Thanh i.e., Truong Thanh and Vietnam Rubber go up and down completely randomly.
Pair Corralation between Truong Thanh and Vietnam Rubber
Assuming the 90 days trading horizon Truong Thanh Furniture is expected to generate 0.75 times more return on investment than Vietnam Rubber. However, Truong Thanh Furniture is 1.34 times less risky than Vietnam Rubber. It trades about -0.07 of its potential returns per unit of risk. Vietnam Rubber Group is currently generating about -0.13 per unit of risk. If you would invest 315,000 in Truong Thanh Furniture on September 13, 2024 and sell it today you would lose (6,000) from holding Truong Thanh Furniture or give up 1.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truong Thanh Furniture vs. Vietnam Rubber Group
Performance |
| Timeline |
| Truong Thanh Furniture |
| Vietnam Rubber Group |
Truong Thanh and Vietnam Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truong Thanh and Vietnam Rubber
The main advantage of trading using opposite Truong Thanh and Vietnam Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truong Thanh position performs unexpectedly, Vietnam Rubber 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 Rubber will offset losses from the drop in Vietnam Rubber's long position.| Truong Thanh vs. FIT INVEST JSC | Truong Thanh vs. Damsan JSC | Truong Thanh vs. An Phat Plastic | Truong Thanh vs. Alphanam ME |
| Vietnam Rubber vs. Elcom Technology Communications | Vietnam Rubber vs. Saigon Viendong Technology | Vietnam Rubber vs. Tien Giang Investment | Vietnam Rubber vs. FPT Digital Retail |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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