Correlation Between Goodyear Tire and VinFast Auto

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

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

Diversification Opportunities for Goodyear Tire and VinFast Auto

-0.03

Correlation Coefficient

Goodyear Tire  VinFast Auto

Good diversification

The 3 months correlation between Goodyear and VinFast is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Goodyear Tire Rubber and VinFast Auto Ltd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VinFast Auto and Goodyear Tire 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 Goodyear Tire Rubber are associated (or correlated) with VinFast Auto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VinFast Auto has no effect on the direction of Goodyear Tire i.e., Goodyear Tire and VinFast Auto go up and down completely randomly.

Pair Corralation between Goodyear Tire and VinFast Auto

Allowing for the 90-day total investment horizon Goodyear Tire Rubber is expected to generate 0.54 times more return on investment than VinFast Auto. However, Goodyear Tire Rubber is 1.86 times less risky than VinFast Auto. It trades about 0.05 of its potential returns per unit of risk. VinFast Auto Ltd is currently generating about 0.01 per unit of risk. If you would invest  868.00  in Goodyear Tire Rubber on August 21, 2024 and sell it today you would earn a total of  64.00  from holding Goodyear Tire Rubber or generate 7.37% return on investment over 90 days.

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

Goodyear Tire Rubber  vs.  VinFast Auto Ltd

Goodyear Tire Rubber

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Goodyear Tire Rubber are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goodyear Tire may actually be approaching a critical reversion point that can send shares even higher in December 2024.

VinFast Auto

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in VinFast Auto Ltd are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of fairly stable basic indicators, VinFast Auto is not utilizing all of its potentials. The current stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Goodyear Tire and VinFast Auto

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

The idea behind Goodyear Tire Rubber and VinFast Auto Ltd 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.