Correlation Between Dong Nai and VTC Telecommunicatio

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

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

Diversification Opportunities for Dong Nai and VTC Telecommunicatio

0.22

Correlation Coefficient

Dong Nai  VTC Telecommunicatio

Modest diversification

The 3 months correlation between Dong and VTC is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Dong Nai Plastic and VTC Telecommunications JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VTC Telecommunications and Dong Nai 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 Dong Nai Plastic are associated (or correlated) with VTC Telecommunicatio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VTC Telecommunications has no effect on the direction of Dong Nai i.e., Dong Nai and VTC Telecommunicatio go up and down completely randomly.

Pair Corralation between Dong Nai and VTC Telecommunicatio

Assuming the 90 days trading horizon Dong Nai Plastic is expected to under-perform the VTC Telecommunicatio. In addition to that, Dong Nai is 1.33 times more volatile than VTC Telecommunications JSC. It trades about -0.01 of its total potential returns per unit of risk. VTC Telecommunications JSC is currently generating about 0.02 per unit of volatility. If you would invest  830,000  in VTC Telecommunications JSC on May 20, 2025 and sell it today you would earn a total of  10,000  from holding VTC Telecommunications JSC or generate 1.2% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	90.57%
Values	Daily Returns

Dong Nai Plastic  vs.  VTC Telecommunications JSC

Dong Nai Plastic

Risk-Adjusted Performance

Weakest

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

VTC Telecommunications

Risk-Adjusted Performance

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.

Pair Trading with Dong Nai and VTC Telecommunicatio

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

The idea behind Dong Nai Plastic and VTC Telecommunications 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.

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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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.