Correlation Between FPT CAPITAL and SSIAM VNFIN

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

By analyzing existing cross correlation between FPT CAPITAL VNX50 and SSIAM VNFIN LEAD, you can compare the effects of market volatilities on FPT CAPITAL and SSIAM VNFIN 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 CAPITAL with a short position of SSIAM VNFIN. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT CAPITAL and SSIAM VNFIN.

Diversification Opportunities for FPT CAPITAL and SSIAM VNFIN

0.24

Correlation Coefficient

FPT CAPITAL  SSIAM VNFIN

Modest diversification

The 3 months correlation between FPT and SSIAM is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding FPT CAPITAL VNX50 and SSIAM VNFIN LEAD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SSIAM VNFIN LEAD and FPT CAPITAL 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 CAPITAL VNX50 are associated (or correlated) with SSIAM VNFIN. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SSIAM VNFIN LEAD has no effect on the direction of FPT CAPITAL i.e., FPT CAPITAL and SSIAM VNFIN go up and down completely randomly.

Pair Corralation between FPT CAPITAL and SSIAM VNFIN

Assuming the 90 days trading horizon FPT CAPITAL VNX50 is expected to under-perform the SSIAM VNFIN. In addition to that, FPT CAPITAL is 1.68 times more volatile than SSIAM VNFIN LEAD. It trades about -0.03 of its total potential returns per unit of risk. SSIAM VNFIN LEAD is currently generating about 0.03 per unit of volatility. If you would invest  2,063,000  in SSIAM VNFIN LEAD on September 4, 2024 and sell it today you would earn a total of  37,000  from holding SSIAM VNFIN LEAD or generate 1.79% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.46%
Values	Daily Returns

FPT CAPITAL VNX50  vs.  SSIAM VNFIN LEAD

FPT CAPITAL VNX50

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days FPT CAPITAL VNX50 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, FPT CAPITAL is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

SSIAM VNFIN LEAD

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in SSIAM VNFIN LEAD are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, SSIAM VNFIN is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with FPT CAPITAL and SSIAM VNFIN

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

The idea behind FPT CAPITAL VNX50 and SSIAM VNFIN LEAD 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.