Correlation Between Vietnam National and Tien Giang

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

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

Diversification Opportunities for Vietnam National and Tien Giang

0.8

Correlation Coefficient

Vietnam National  Tien Giang

Very poor diversification

The 3 months correlation between Vietnam and Tien is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam National Reinsurance and Tien Giang Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tien Giang Investment and Vietnam National 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 National Reinsurance are associated (or correlated) with Tien Giang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tien Giang Investment has no effect on the direction of Vietnam National i.e., Vietnam National and Tien Giang go up and down completely randomly.

Pair Corralation between Vietnam National and Tien Giang

Assuming the 90 days trading horizon Vietnam National Reinsurance is expected to under-perform the Tien Giang. In addition to that, Vietnam National is 1.23 times more volatile than Tien Giang Investment. It trades about -0.02 of its total potential returns per unit of risk. Tien Giang Investment is currently generating about 0.03 per unit of volatility. If you would invest  4,396,209  in Tien Giang Investment on September 15, 2024 and sell it today you would earn a total of  53,791  from holding Tien Giang Investment or generate 1.22% return on investment over 90 days.

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

Vietnam National Reinsurance  vs.  Tien Giang Investment

Vietnam National Rei

Risk-Adjusted Performance

0 of 100

Very Weak

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

Tien Giang Investment

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tien Giang Investment are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy technical and fundamental indicators, Tien Giang is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Vietnam National and Tien Giang

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

The idea behind Vietnam National Reinsurance and Tien Giang Investment 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..