Correlation Between Viet Thanh and Military Insurance

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Can any of the company-specific risk be diversified away by investing in both Viet Thanh and Military Insurance 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 Viet Thanh and Military Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Viet Thanh Plastic and Military Insurance Corp, you can compare the effects of market volatilities on Viet Thanh and Military Insurance 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 Viet Thanh with a short position of Military Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Viet Thanh and Military Insurance.

Diversification Opportunities for Viet Thanh and Military Insurance

0.53
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Viet and Military is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Viet Thanh Plastic and Military Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Military Insurance Corp and Viet Thanh 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 Viet Thanh Plastic are associated (or correlated) with Military Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Military Insurance Corp has no effect on the direction of Viet Thanh i.e., Viet Thanh and Military Insurance go up and down completely randomly.

Pair Corralation between Viet Thanh and Military Insurance

Assuming the 90 days trading horizon Viet Thanh Plastic is expected to generate 0.6 times more return on investment than Military Insurance. However, Viet Thanh Plastic is 1.66 times less risky than Military Insurance. It trades about 0.49 of its potential returns per unit of risk. Military Insurance Corp is currently generating about 0.16 per unit of risk. If you would invest  1,680,000  in Viet Thanh Plastic on November 8, 2024 and sell it today you would earn a total of  90,000  from holding Viet Thanh Plastic or generate 5.36% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy94.44%
ValuesDaily Returns

Viet Thanh Plastic  vs.  Military Insurance Corp

 Performance 
       Timeline  
Viet Thanh Plastic 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Good
Over the last 90 days Viet Thanh Plastic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, Viet Thanh may actually be approaching a critical reversion point that can send shares even higher in March 2025.
Military Insurance Corp 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Military Insurance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy technical and fundamental indicators, Military Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Viet Thanh and Military Insurance Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Viet Thanh and Military Insurance

The main advantage of trading using opposite Viet Thanh and Military Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Viet Thanh position performs unexpectedly, Military Insurance 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 Military Insurance will offset losses from the drop in Military Insurance's long position.
The idea behind Viet Thanh Plastic and Military Insurance Corp 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.

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