Correlation Between Vietnam Airlines and Vincom Retail

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

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

Diversification Opportunities for Vietnam Airlines and Vincom Retail

-0.76

Correlation Coefficient

Vietnam Airlines  Vincom Retail

Pay attention - limited upside

The 3 months correlation between Vietnam and Vincom is -0.76. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Airlines JSC and Vincom Retail JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vincom Retail JSC and Vietnam Airlines 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 Vietnam Airlines JSC are associated (or correlated) with Vincom Retail. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vincom Retail JSC has no effect on the direction of Vietnam Airlines i.e., Vietnam Airlines and Vincom Retail go up and down completely randomly.

Pair Corralation between Vietnam Airlines and Vincom Retail

Assuming the 90 days trading horizon Vietnam Airlines JSC is expected to generate 2.27 times more return on investment than Vincom Retail. However, Vietnam Airlines is 2.27 times more volatile than Vincom Retail JSC. It trades about 0.21 of its potential returns per unit of risk. Vincom Retail JSC is currently generating about -0.14 per unit of risk. If you would invest  2,105,000  in Vietnam Airlines JSC on September 28, 2024 and sell it today you would earn a total of  795,000  from holding Vietnam Airlines JSC or generate 37.77% return on investment over 90 days.

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

Vietnam Airlines JSC  vs.  Vincom Retail JSC

Vietnam Airlines JSC

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Vietnam Airlines JSC are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vietnam Airlines displayed solid returns over the last few months and may actually be approaching a breakup point.

Vincom Retail JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Vincom Retail JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's technical and fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Vietnam Airlines and Vincom Retail

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

The idea behind Vietnam Airlines JSC and Vincom Retail 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.