Correlation Between VietinBank Securities and SCG Construction

Can any of the company-specific risk be diversified away by investing in both VietinBank Securities and SCG Construction 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 VietinBank Securities and SCG Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between VietinBank Securities JSC and SCG Construction JSC, you can compare the effects of market volatilities on VietinBank Securities and SCG Construction 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 VietinBank Securities with a short position of SCG Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of VietinBank Securities and SCG Construction.

Diversification Opportunities for VietinBank Securities and SCG Construction

-0.09

Correlation Coefficient

VietinBank Securities  SCG Construction

Good diversification

The 3 months correlation between VietinBank and SCG is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding VietinBank Securities JSC and SCG Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SCG Construction JSC and VietinBank Securities 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 VietinBank Securities JSC are associated (or correlated) with SCG Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SCG Construction JSC has no effect on the direction of VietinBank Securities i.e., VietinBank Securities and SCG Construction go up and down completely randomly.

Pair Corralation between VietinBank Securities and SCG Construction

Assuming the 90 days trading horizon VietinBank Securities JSC is expected to under-perform the SCG Construction. In addition to that, VietinBank Securities is 4.94 times more volatile than SCG Construction JSC. It trades about -0.04 of its total potential returns per unit of risk. SCG Construction JSC is currently generating about -0.02 per unit of volatility. If you would invest  6,540,000  in SCG Construction JSC on September 14, 2024 and sell it today you would lose (30,000) from holding SCG Construction JSC or give up 0.46% of portfolio value over 90 days.

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

VietinBank Securities JSC  vs.  SCG Construction JSC

VietinBank Securities JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VietinBank Securities JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, VietinBank Securities is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

SCG Construction JSC

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with VietinBank Securities and SCG Construction

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

The idea behind VietinBank Securities JSC and SCG Construction JSC 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.