Correlation Between Vietnam Enterprise and National Beverage
Can any of the company-specific risk be diversified away by investing in both Vietnam Enterprise and National Beverage 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 Enterprise and National Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam Enterprise Investments and National Beverage Corp, you can compare the effects of market volatilities on Vietnam Enterprise and National Beverage 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 Enterprise with a short position of National Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Enterprise and National Beverage.
Diversification Opportunities for Vietnam Enterprise and National Beverage
-0.75 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Vietnam and National is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Enterprise Investments and National Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on National Beverage Corp and Vietnam Enterprise 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 Enterprise Investments are associated (or correlated) with National Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of National Beverage Corp has no effect on the direction of Vietnam Enterprise i.e., Vietnam Enterprise and National Beverage go up and down completely randomly.
Pair Corralation between Vietnam Enterprise and National Beverage
Assuming the 90 days trading horizon Vietnam Enterprise Investments is expected to generate 0.64 times more return on investment than National Beverage. However, Vietnam Enterprise Investments is 1.57 times less risky than National Beverage. It trades about -0.07 of its potential returns per unit of risk. National Beverage Corp is currently generating about -0.04 per unit of risk. If you would invest 61,200 in Vietnam Enterprise Investments on November 1, 2024 and sell it today you would lose (800.00) from holding Vietnam Enterprise Investments or give up 1.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Enterprise Investments vs. National Beverage Corp
Performance |
| Timeline |
| Vietnam Enterprise |
| National Beverage Corp |
Vietnam Enterprise and National Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Enterprise and National Beverage
The main advantage of trading using opposite Vietnam Enterprise and National Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Enterprise position performs unexpectedly, National Beverage 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 National Beverage will offset losses from the drop in National Beverage's long position.| Vietnam Enterprise vs. Associated British Foods | Vietnam Enterprise vs. DXC Technology Co | Vietnam Enterprise vs. Dairy Farm International | Vietnam Enterprise vs. Bell Food Group |
| National Beverage vs. Compagnie Plastic Omnium | National Beverage vs. Compal Electronics GDR | National Beverage vs. Arrow Electronics | National Beverage vs. Bloomsbury Publishing Plc |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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