Correlation Between VTC Telecommunicatio and BIDV Insurance

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

By analyzing existing cross correlation between VTC Telecommunications JSC and BIDV Insurance Corp, you can compare the effects of market volatilities on VTC Telecommunicatio and BIDV Insurance 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 VTC Telecommunicatio with a short position of BIDV Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of VTC Telecommunicatio and BIDV Insurance.

Diversification Opportunities for VTC Telecommunicatio and BIDV Insurance

-0.29

Correlation Coefficient

VTC Telecommunicatio  BIDV Insurance

Very good diversification

The 3 months correlation between VTC and BIDV is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding VTC Telecommunications JSC and BIDV Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIDV Insurance Corp and VTC Telecommunicatio 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 VTC Telecommunications JSC are associated (or correlated) with BIDV Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIDV Insurance Corp has no effect on the direction of VTC Telecommunicatio i.e., VTC Telecommunicatio and BIDV Insurance go up and down completely randomly.

Pair Corralation between VTC Telecommunicatio and BIDV Insurance

Assuming the 90 days trading horizon VTC Telecommunicatio is expected to generate 1.82 times less return on investment than BIDV Insurance. In addition to that, VTC Telecommunicatio is 1.67 times more volatile than BIDV Insurance Corp. It trades about 0.02 of its total potential returns per unit of risk. BIDV Insurance Corp is currently generating about 0.06 per unit of volatility. If you would invest  3,245,000  in BIDV Insurance Corp on September 29, 2024 and sell it today you would earn a total of  160,000  from holding BIDV Insurance Corp or generate 4.93% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	92.31%
Values	Daily Returns

VTC Telecommunications JSC  vs.  BIDV Insurance Corp

VTC Telecommunications

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VTC Telecommunications JSC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, VTC Telecommunicatio is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

BIDV Insurance Corp

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in BIDV Insurance Corp are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, BIDV Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with VTC Telecommunicatio and BIDV Insurance

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

The idea behind VTC Telecommunications JSC and BIDV Insurance Corp 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.

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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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.