Correlation Between VinFast Auto and China CITIC

Can any of the company-specific risk be diversified away by investing in both VinFast Auto and China CITIC 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 China CITIC 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 China CITIC Bank, you can compare the effects of market volatilities on VinFast Auto and China CITIC 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 China CITIC. Check out your portfolio center. Please also check ongoing floating volatility patterns of VinFast Auto and China CITIC.

Diversification Opportunities for VinFast Auto and China CITIC

-0.45

Correlation Coefficient

VinFast Auto  China CITIC

Very good diversification

The 3 months correlation between VinFast and China is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding VinFast Auto Ltd and China CITIC Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on China CITIC Bank 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 China CITIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of China CITIC Bank has no effect on the direction of VinFast Auto i.e., VinFast Auto and China CITIC go up and down completely randomly.

Pair Corralation between VinFast Auto and China CITIC

If you would invest  59.00  in China CITIC Bank on March 12, 2024 and sell it today you would earn a total of  0.00  from holding China CITIC Bank or generate 0.0% return on investment over 90 days.

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

VinFast Auto Ltd  vs.  China CITIC Bank

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 comparatively stable technical and fundamental indicators, VinFast Auto is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

China CITIC Bank

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in China CITIC Bank are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak forward-looking indicators, China CITIC reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with VinFast Auto and China CITIC

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

The idea behind VinFast Auto Ltd and China CITIC Bank 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.