Correlation Between Vietnam Dairy and Vietnam Rubber
Can any of the company-specific risk be diversified away by investing in both Vietnam Dairy 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 Vietnam Dairy and Vietnam Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam Dairy Products and Vietnam Rubber Group, you can compare the effects of market volatilities on Vietnam Dairy 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 Vietnam Dairy with a short position of Vietnam Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Dairy and Vietnam Rubber.
Diversification Opportunities for Vietnam Dairy and Vietnam Rubber
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vietnam and Vietnam is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Dairy Products 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 Vietnam Dairy 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 Dairy Products 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 Vietnam Dairy i.e., Vietnam Dairy and Vietnam Rubber go up and down completely randomly.
Pair Corralation between Vietnam Dairy and Vietnam Rubber
Assuming the 90 days trading horizon Vietnam Dairy Products is expected to generate 0.49 times more return on investment than Vietnam Rubber. However, Vietnam Dairy Products is 2.05 times less risky than Vietnam Rubber. It trades about -0.12 of its potential returns per unit of risk. Vietnam Rubber Group is currently generating about -0.14 per unit of risk. If you would invest 6,380,000 in Vietnam Dairy Products on October 26, 2024 and sell it today you would lose (220,000) from holding Vietnam Dairy Products or give up 3.45% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Dairy Products vs. Vietnam Rubber Group
Performance |
| Timeline |
| Vietnam Dairy Products |
| Vietnam Rubber Group |
Vietnam Dairy and Vietnam Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Dairy and Vietnam Rubber
The main advantage of trading using opposite Vietnam Dairy and Vietnam Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Dairy 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.| Vietnam Dairy vs. FIT INVEST JSC | Vietnam Dairy vs. Damsan JSC | Vietnam Dairy vs. An Phat Plastic | Vietnam Dairy vs. APG Securities Joint |
| Vietnam Rubber vs. FIT INVEST JSC | Vietnam Rubber vs. Damsan JSC | Vietnam Rubber vs. An Phat Plastic | Vietnam Rubber vs. APG Securities Joint |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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