Correlation Between Vietnam National and Saigon Viendong
Can any of the company-specific risk be diversified away by investing in both Vietnam National and Saigon Viendong 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 Saigon Viendong 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 Saigon Viendong Technology, you can compare the effects of market volatilities on Vietnam National and Saigon Viendong 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 Saigon Viendong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam National and Saigon Viendong.
Diversification Opportunities for Vietnam National and Saigon Viendong
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vietnam and Saigon is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam National Reinsurance and Saigon Viendong Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Saigon Viendong Tech 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 Saigon Viendong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Saigon Viendong Tech has no effect on the direction of Vietnam National i.e., Vietnam National and Saigon Viendong go up and down completely randomly.
Pair Corralation between Vietnam National and Saigon Viendong
Assuming the 90 days trading horizon Vietnam National Reinsurance is expected to under-perform the Saigon Viendong. But the stock apears to be less risky and, when comparing its historical volatility, Vietnam National Reinsurance is 2.2 times less risky than Saigon Viendong. The stock trades about -0.04 of its potential returns per unit of risk. The Saigon Viendong Technology is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,140,000 in Saigon Viendong Technology on September 1, 2024 and sell it today you would earn a total of 0.00 from holding Saigon Viendong Technology or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Vietnam National Reinsurance vs. Saigon Viendong Technology
Performance |
| Timeline |
| Vietnam National Rei |
| Saigon Viendong Tech |
Vietnam National and Saigon Viendong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam National and Saigon Viendong
The main advantage of trading using opposite Vietnam National and Saigon Viendong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam National position performs unexpectedly, Saigon Viendong 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 Saigon Viendong will offset losses from the drop in Saigon Viendong'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 |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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