Correlation Between Gap, and VinFast Auto

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

By analyzing existing cross correlation between The Gap, and VinFast Auto Ltd, you can compare the effects of market volatilities on Gap, and VinFast Auto 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 Gap, with a short position of VinFast Auto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gap, and VinFast Auto.

Diversification Opportunities for Gap, and VinFast Auto

0.75

Correlation Coefficient

Gap,  VinFast Auto

Poor diversification

The 3 months correlation between Gap, and VinFast is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding The Gap, and VinFast Auto Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VinFast Auto and Gap, 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 The Gap, are associated (or correlated) with VinFast Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VinFast Auto has no effect on the direction of Gap, i.e., Gap, and VinFast Auto go up and down completely randomly.

Pair Corralation between Gap, and VinFast Auto

Considering the 90-day investment horizon Gap, is expected to generate 2.25 times less return on investment than VinFast Auto. But when comparing it to its historical volatility, The Gap, is 4.87 times less risky than VinFast Auto. It trades about 0.07 of its potential returns per unit of risk. VinFast Auto Ltd is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,045  in VinFast Auto Ltd on September 18, 2024 and sell it today you would lose (621.50) from holding VinFast Auto Ltd or give up 59.47% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	68.69%
Values	Daily Returns

The Gap,  vs.  VinFast Auto Ltd

Gap,

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in The Gap, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Even with relatively inconsistent basic indicators, Gap, reported solid returns over the last few months and may actually be approaching a breakup point.

VinFast Auto

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in VinFast Auto Ltd are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile technical and fundamental indicators, VinFast Auto unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Gap, and VinFast Auto

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

The idea behind The Gap, and VinFast Auto Ltd 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.