Correlation Between Sea Air and Viettel Construction

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

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

Diversification Opportunities for Sea Air and Viettel Construction

0.45

Correlation Coefficient

Sea Air  Viettel Construction

Very weak diversification

The 3 months correlation between Sea and Viettel is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Sea Air Freight and Viettel Construction JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viettel Construction JSC and Sea Air 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 Sea Air Freight are associated (or correlated) with Viettel Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viettel Construction JSC has no effect on the direction of Sea Air i.e., Sea Air and Viettel Construction go up and down completely randomly.

Pair Corralation between Sea Air and Viettel Construction

Assuming the 90 days trading horizon Sea Air Freight is expected to generate 0.75 times more return on investment than Viettel Construction. However, Sea Air Freight is 1.33 times less risky than Viettel Construction. It trades about -0.03 of its potential returns per unit of risk. Viettel Construction JSC is currently generating about -0.07 per unit of risk. If you would invest  3,390,000  in Sea Air Freight on September 15, 2024 and sell it today you would lose (240,000) from holding Sea Air Freight or give up 7.08% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	89.06%
Values	Daily Returns

Sea Air Freight  vs.  Viettel Construction JSC

Sea Air Freight

Risk-Adjusted Performance

0 of 100

Very Weak

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

Viettel Construction JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Viettel Construction JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Viettel 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 Sea Air and Viettel Construction

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

The idea behind Sea Air Freight and Viettel 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.