Correlation Between VTC Telecommunicatio and Vien Dong
Can any of the company-specific risk be diversified away by investing in both VTC Telecommunicatio and Vien Dong 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 Vien Dong 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 Vien Dong Investment, you can compare the effects of market volatilities on VTC Telecommunicatio and Vien Dong 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 Vien Dong. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTC Telecommunicatio and Vien Dong.
Diversification Opportunities for VTC Telecommunicatio and Vien Dong
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between VTC and Vien is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding VTC Telecommunications JSC and Vien Dong Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vien Dong Investment 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 Vien Dong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vien Dong Investment has no effect on the direction of VTC Telecommunicatio i.e., VTC Telecommunicatio and Vien Dong go up and down completely randomly.
Pair Corralation between VTC Telecommunicatio and Vien Dong
Assuming the 90 days trading horizon VTC Telecommunications JSC is expected to generate 2.08 times more return on investment than Vien Dong. However, VTC Telecommunicatio is 2.08 times more volatile than Vien Dong Investment. It trades about 0.03 of its potential returns per unit of risk. Vien Dong Investment is currently generating about 0.02 per unit of risk. If you would invest 801,553 in VTC Telecommunications JSC on November 9, 2024 and sell it today you would earn a total of 58,447 from holding VTC Telecommunications JSC or generate 7.29% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 92.64% |
| Values | Daily Returns |
VTC Telecommunications JSC vs. Vien Dong Investment
Performance |
| Timeline |
| VTC Telecommunications |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Vien Dong Investment |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
VTC Telecommunicatio and Vien Dong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VTC Telecommunicatio and Vien Dong
The main advantage of trading using opposite VTC Telecommunicatio and Vien Dong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VTC Telecommunicatio position performs unexpectedly, Vien Dong 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 Vien Dong will offset losses from the drop in Vien Dong's long position.The idea behind VTC Telecommunications JSC and Vien Dong Investment 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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