Correlation Between VN 30 and Tri Viet

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Can any of the company-specific risk be diversified away by investing in both VN 30 and Tri Viet 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 30 and Tri Viet into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VN 30 and Tri Viet Management, you can compare the effects of market volatilities on VN 30 and Tri Viet 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 30 with a short position of Tri Viet. Check out your portfolio center. Please also check ongoing floating volatility patterns of VN 30 and Tri Viet.

Diversification Opportunities for VN 30 and Tri Viet

-0.12
  Correlation Coefficient

Good diversification

The 3 months correlation between VNI30 and Tri is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding VN 30 and Tri Viet Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tri Viet Management and VN 30 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 30 are associated (or correlated) with Tri Viet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tri Viet Management has no effect on the direction of VN 30 i.e., VN 30 and Tri Viet go up and down completely randomly.
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Pair Corralation between VN 30 and Tri Viet

Assuming the 90 days trading horizon VN 30 is expected to generate 5.46 times less return on investment than Tri Viet. But when comparing it to its historical volatility, VN 30 is 2.71 times less risky than Tri Viet. It trades about 0.04 of its potential returns per unit of risk. Tri Viet Management is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  670,000  in Tri Viet Management on September 12, 2024 and sell it today you would earn a total of  400,000  from holding Tri Viet Management or generate 59.7% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy67.24%
ValuesDaily Returns

VN 30  vs.  Tri Viet Management

 Performance 
       Timeline  

VN 30 and Tri Viet Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with VN 30 and Tri Viet

The main advantage of trading using opposite VN 30 and Tri Viet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VN 30 position performs unexpectedly, Tri Viet 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 Tri Viet will offset losses from the drop in Tri Viet's long position.
The idea behind VN 30 and Tri Viet Management pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.

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