Correlation Between VinFast Auto and Rentokil Initial

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

By analyzing existing cross correlation between VinFast Auto Ltd and Rentokil Initial plc, you can compare the effects of market volatilities on VinFast Auto and Rentokil Initial 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 VinFast Auto with a short position of Rentokil Initial. Check out your portfolio center. Please also check ongoing floating volatility patterns of VinFast Auto and Rentokil Initial.

Diversification Opportunities for VinFast Auto and Rentokil Initial

-0.84

Correlation Coefficient

VinFast Auto  Rentokil Initial

Pay attention - limited upside

The 3 months correlation between VinFast and Rentokil is -0.84. Overlapping area represents the amount of risk that can be diversified away by holding VinFast Auto Ltd and Rentokil Initial plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rentokil Initial plc and VinFast Auto 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 VinFast Auto Ltd are associated (or correlated) with Rentokil Initial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rentokil Initial plc has no effect on the direction of VinFast Auto i.e., VinFast Auto and Rentokil Initial go up and down completely randomly.

Pair Corralation between VinFast Auto and Rentokil Initial

Considering the 90-day investment horizon VinFast Auto Ltd is expected to under-perform the Rentokil Initial. In addition to that, VinFast Auto is 3.51 times more volatile than Rentokil Initial plc. It trades about -0.26 of its total potential returns per unit of risk. Rentokil Initial plc is currently generating about -0.03 per unit of volatility. If you would invest  545.00  in Rentokil Initial plc on February 8, 2024 and sell it today you would lose (7.00) from holding Rentokil Initial plc or give up 1.28% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Significant
Accuracy	95.65%
Values	Daily Returns

VinFast Auto Ltd  vs.  Rentokil Initial plc

VinFast Auto

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days VinFast Auto Ltd has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's technical and fundamental indicators remain comparatively stable which may send shares a bit higher in June 2024. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Rentokil Initial plc

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Rentokil Initial plc are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly inconsistent forward indicators, Rentokil Initial may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with VinFast Auto and Rentokil Initial

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

The idea behind VinFast Auto Ltd and Rentokil Initial plc 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.