Correlation Between South Basic and Vinacomin NuiBeo

Can any of the company-specific risk be diversified away by investing in both South Basic and Vinacomin NuiBeo 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 South Basic and Vinacomin NuiBeo into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between South Basic Chemicals and Vinacomin NuiBeo Coal, you can compare the effects of market volatilities on South Basic and Vinacomin NuiBeo 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 South Basic with a short position of Vinacomin NuiBeo. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Basic and Vinacomin NuiBeo.

Diversification Opportunities for South Basic and Vinacomin NuiBeo

-0.4

Correlation Coefficient

South Basic  Vinacomin NuiBeo

Very good diversification

The 3 months correlation between South and Vinacomin is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and Vinacomin NuiBeo Coal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vinacomin NuiBeo Coal and South Basic 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 South Basic Chemicals are associated (or correlated) with Vinacomin NuiBeo. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vinacomin NuiBeo Coal has no effect on the direction of South Basic i.e., South Basic and Vinacomin NuiBeo go up and down completely randomly.

Pair Corralation between South Basic and Vinacomin NuiBeo

Assuming the 90 days trading horizon South Basic Chemicals is expected to generate 1.63 times more return on investment than Vinacomin NuiBeo. However, South Basic is 1.63 times more volatile than Vinacomin NuiBeo Coal. It trades about 0.12 of its potential returns per unit of risk. Vinacomin NuiBeo Coal is currently generating about -0.16 per unit of risk. If you would invest  3,865,000  in South Basic Chemicals on September 29, 2024 and sell it today you would earn a total of  750,000  from holding South Basic Chemicals or generate 19.4% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

South Basic Chemicals  vs.  Vinacomin NuiBeo Coal

South Basic Chemicals

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in South Basic Chemicals are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, South Basic displayed solid returns over the last few months and may actually be approaching a breakup point.

Vinacomin NuiBeo Coal

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vinacomin NuiBeo Coal has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with South Basic and Vinacomin NuiBeo

The main advantage of trading using opposite South Basic and Vinacomin NuiBeo positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Basic position performs unexpectedly, Vinacomin NuiBeo 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 Vinacomin NuiBeo will offset losses from the drop in Vinacomin NuiBeo's long position.

The idea behind South Basic Chemicals and Vinacomin NuiBeo Coal 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.

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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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.