Correlation Between FPT Corp and Thong Nhat

Can any of the company-specific risk be diversified away by investing in both FPT Corp and Thong Nhat 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 FPT Corp and Thong Nhat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between FPT Corp and Thong Nhat Rubber, you can compare the effects of market volatilities on FPT Corp and Thong Nhat 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 FPT Corp with a short position of Thong Nhat. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT Corp and Thong Nhat.

Diversification Opportunities for FPT Corp and Thong Nhat

-0.66

Correlation Coefficient

FPT Corp  Thong Nhat

Excellent diversification

The 3 months correlation between FPT and Thong is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding FPT Corp and Thong Nhat Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thong Nhat Rubber and FPT Corp 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 FPT Corp are associated (or correlated) with Thong Nhat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thong Nhat Rubber has no effect on the direction of FPT Corp i.e., FPT Corp and Thong Nhat go up and down completely randomly.

Pair Corralation between FPT Corp and Thong Nhat

Assuming the 90 days trading horizon FPT Corp is expected to generate 0.34 times more return on investment than Thong Nhat. However, FPT Corp is 2.92 times less risky than Thong Nhat. It trades about 0.36 of its potential returns per unit of risk. Thong Nhat Rubber is currently generating about -0.23 per unit of risk. If you would invest  13,390,000  in FPT Corp on September 23, 2024 and sell it today you would earn a total of  1,583,000  from holding FPT Corp or generate 11.82% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	63.64%
Values	Daily Returns

FPT Corp  vs.  Thong Nhat Rubber

FPT Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in FPT Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FPT Corp may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Thong Nhat Rubber

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Thong Nhat Rubber 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 FPT Corp and Thong Nhat

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

The idea behind FPT Corp and Thong Nhat Rubber 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.