Correlation Between Vietnam National and Hochiminh City
Can any of the company-specific risk be diversified away by investing in both Vietnam National and Hochiminh City 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 Hochiminh City 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 Hochiminh City Metal, you can compare the effects of market volatilities on Vietnam National and Hochiminh City 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 Hochiminh City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam National and Hochiminh City.
Diversification Opportunities for Vietnam National and Hochiminh City
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vietnam and Hochiminh is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam National Reinsurance and Hochiminh City Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochiminh City Metal 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 Hochiminh City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochiminh City Metal has no effect on the direction of Vietnam National i.e., Vietnam National and Hochiminh City go up and down completely randomly.
Pair Corralation between Vietnam National and Hochiminh City
Assuming the 90 days trading horizon Vietnam National Reinsurance is expected to generate 0.83 times more return on investment than Hochiminh City. However, Vietnam National Reinsurance is 1.21 times less risky than Hochiminh City. It trades about 0.04 of its potential returns per unit of risk. Hochiminh City Metal is currently generating about 0.03 per unit of risk. If you would invest 1,932,860 in Vietnam National Reinsurance on August 24, 2024 and sell it today you would earn a total of 367,140 from holding Vietnam National Reinsurance or generate 18.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Vietnam National Reinsurance vs. Hochiminh City Metal
Performance |
Timeline |
Vietnam National Rei |
Hochiminh City Metal |
Vietnam National and Hochiminh City Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Vietnam National and Hochiminh City
The main advantage of trading using opposite Vietnam National and Hochiminh City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam National position performs unexpectedly, Hochiminh City 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 Hochiminh City will offset losses from the drop in Hochiminh City's long position.Vietnam National vs. Sao Vang Rubber | Vietnam National vs. Century Synthetic Fiber | Vietnam National vs. Construction And Investment | Vietnam National vs. Saigon Telecommunication Technologies |
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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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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