Correlation Between VN Index and South Basic
Can any of the company-specific risk be diversified away by investing in both VN Index and South Basic 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 VN Index and South Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VN Index and South Basic Chemicals, you can compare the effects of market volatilities on VN Index and South Basic 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 VN Index with a short position of South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of VN Index and South Basic.
Diversification Opportunities for VN Index and South Basic
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between VNI and South is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding VN Index and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals and VN Index 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 VN Index are associated (or correlated) with South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of VN Index i.e., VN Index and South Basic go up and down completely randomly.
Pair Corralation between VN Index and South Basic
Assuming the 90 days trading horizon VN Index is expected to generate 0.19 times more return on investment than South Basic. However, VN Index is 5.25 times less risky than South Basic. It trades about 0.04 of its potential returns per unit of risk. South Basic Chemicals is currently generating about -0.05 per unit of risk. If you would invest 103,207 in VN Index on September 2, 2024 and sell it today you would earn a total of 21,839 from holding VN Index or generate 21.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VN Index vs. South Basic Chemicals
Performance |
| Timeline |
VN Index and South Basic Volatility Contrast
Predicted Return Density |
| Returns |
VN Index
Pair trading matchups for VN Index
South Basic Chemicals
Pair trading matchups for South Basic
Pair Trading with VN Index and South Basic
The main advantage of trading using opposite VN Index and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VN Index position performs unexpectedly, South Basic 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 South Basic will offset losses from the drop in South Basic's long position.| VN Index vs. South Basic Chemicals | VN Index vs. Century Synthetic Fiber | VN Index vs. LDG Investment JSC | VN Index vs. Saigon Telecommunication Technologies |
| South Basic vs. Vu Dang Investment | South Basic vs. Thanh Dat Investment | South Basic vs. DOMESCO Medical Import | South Basic vs. Tien Giang Investment |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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