Correlation Between Vietnam National and Fecon Mining
Can any of the company-specific risk be diversified away by investing in both Vietnam National and Fecon Mining 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 National and Fecon Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam National Reinsurance and Fecon Mining JSC, you can compare the effects of market volatilities on Vietnam National and Fecon Mining 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 National with a short position of Fecon Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam National and Fecon Mining.
Diversification Opportunities for Vietnam National and Fecon Mining
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Vietnam and Fecon is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam National Reinsurance and Fecon Mining JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fecon Mining JSC and Vietnam National 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 National Reinsurance are associated (or correlated) with Fecon Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fecon Mining JSC has no effect on the direction of Vietnam National i.e., Vietnam National and Fecon Mining go up and down completely randomly.
Pair Corralation between Vietnam National and Fecon Mining
Assuming the 90 days trading horizon Vietnam National Reinsurance is expected to generate 0.36 times more return on investment than Fecon Mining. However, Vietnam National Reinsurance is 2.75 times less risky than Fecon Mining. It trades about -0.04 of its potential returns per unit of risk. Fecon Mining JSC is currently generating about -0.28 per unit of risk. If you would invest 2,300,000 in Vietnam National Reinsurance on September 1, 2024 and sell it today you would lose (10,000) from holding Vietnam National Reinsurance or give up 0.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam National Reinsurance vs. Fecon Mining JSC
Performance |
| Timeline |
| Vietnam National Rei |
| Fecon Mining JSC |
Vietnam National and Fecon Mining Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam National and Fecon Mining
The main advantage of trading using opposite Vietnam National and Fecon Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam National position performs unexpectedly, Fecon Mining 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 Fecon Mining will offset losses from the drop in Fecon Mining's long position.| Vietnam National vs. Vietnam Airlines JSC | Vietnam National vs. Development Investment Construction | Vietnam National vs. Military Insurance Corp | Vietnam National vs. Petrolimex International Trading |
| Fecon Mining vs. Vien Dong Investment | Fecon Mining vs. CMC Investment JSC | Fecon Mining vs. Dong A Hotel | Fecon Mining vs. Development Investment Construction |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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