Correlation Between VTC Telecommunicatio and Binhthuan Agriculture
Can any of the company-specific risk be diversified away by investing in both VTC Telecommunicatio and Binhthuan Agriculture 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 VTC Telecommunicatio and Binhthuan Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VTC Telecommunications JSC and Binhthuan Agriculture Services, you can compare the effects of market volatilities on VTC Telecommunicatio and Binhthuan Agriculture 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 VTC Telecommunicatio with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTC Telecommunicatio and Binhthuan Agriculture.
Diversification Opportunities for VTC Telecommunicatio and Binhthuan Agriculture
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between VTC and Binhthuan is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding VTC Telecommunications JSC and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and VTC Telecommunicatio 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 VTC Telecommunications JSC are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of VTC Telecommunicatio i.e., VTC Telecommunicatio and Binhthuan Agriculture go up and down completely randomly.
Pair Corralation between VTC Telecommunicatio and Binhthuan Agriculture
Assuming the 90 days trading horizon VTC Telecommunications JSC is expected to generate 2.43 times more return on investment than Binhthuan Agriculture. However, VTC Telecommunicatio is 2.43 times more volatile than Binhthuan Agriculture Services. It trades about 0.01 of its potential returns per unit of risk. Binhthuan Agriculture Services is currently generating about -0.04 per unit of risk. If you would invest 1,120,167 in VTC Telecommunications JSC on August 27, 2024 and sell it today you would lose (280,167) from holding VTC Telecommunications JSC or give up 25.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 72.91% |
| Values | Daily Returns |
VTC Telecommunications JSC vs. Binhthuan Agriculture Services
Performance |
| Timeline |
| VTC Telecommunications |
| Binhthuan Agriculture |
VTC Telecommunicatio and Binhthuan Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VTC Telecommunicatio and Binhthuan Agriculture
The main advantage of trading using opposite VTC Telecommunicatio and Binhthuan Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VTC Telecommunicatio position performs unexpectedly, Binhthuan Agriculture 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 Binhthuan Agriculture will offset losses from the drop in Binhthuan Agriculture's long position.The idea behind VTC Telecommunications JSC and Binhthuan Agriculture Services 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.
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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