Correlation Between Vina2 Investment and CMC Investment

Can any of the company-specific risk be diversified away by investing in both Vina2 Investment and CMC Investment 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 Vina2 Investment and CMC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Vina2 Investment and and CMC Investment JSC, you can compare the effects of market volatilities on Vina2 Investment and CMC Investment 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 Vina2 Investment with a short position of CMC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vina2 Investment and CMC Investment.

Diversification Opportunities for Vina2 Investment and CMC Investment

-0.75

Correlation Coefficient

Vina2 Investment  CMC Investment

Pay attention - limited upside

The 3 months correlation between Vina2 and CMC is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vina2 Investment and and CMC Investment JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CMC Investment JSC and Vina2 Investment 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 Vina2 Investment and are associated (or correlated) with CMC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CMC Investment JSC has no effect on the direction of Vina2 Investment i.e., Vina2 Investment and CMC Investment go up and down completely randomly.

Pair Corralation between Vina2 Investment and CMC Investment

Assuming the 90 days trading horizon Vina2 Investment is expected to generate 1.13 times less return on investment than CMC Investment. But when comparing it to its historical volatility, Vina2 Investment and is 1.41 times less risky than CMC Investment. It trades about 0.13 of its potential returns per unit of risk. CMC Investment JSC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  550,000  in CMC Investment JSC on September 30, 2024 and sell it today you would earn a total of  30,000  from holding CMC Investment JSC or generate 5.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	71.43%
Values	Daily Returns

Vina2 Investment and  vs.  CMC Investment JSC

Vina2 Investment

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vina2 Investment and are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Vina2 Investment displayed solid returns over the last few months and may actually be approaching a breakup point.

CMC Investment JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CMC Investment JSC 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 Vina2 Investment and CMC Investment

The main advantage of trading using opposite Vina2 Investment and CMC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vina2 Investment position performs unexpectedly, CMC Investment 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 CMC Investment will offset losses from the drop in CMC Investment's long position.

The idea behind Vina2 Investment and and CMC Investment 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.