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Sensitivity analysis and how useful it can be during crisis





Creating a sensitivity analysis is a way that will show you your returns depending on different scenarios. In other words, sensitivity analyses study how various sources of uncertainty in a mathematical model contribute to the model's overall uncertainty. It can become very complex at times but it is also possible to keep it quite simple most of the time. If you want to make it very complex you just need to include as many variables as you can. For instance different scenarios depending from different levels of inflation or different levels of economic growth. It’s not all about the local macro-economic though, and what happens on other stock markets globally will have impact (positive or negative) to the Vietnamese stock markets too. Finally a really important but often overlooked factor is exchange rates. You might have returns of 10% a year when you look at your portfolio in local currencies for instance in Vietnamese dong but this return will be different in your own local currency (sometimes better sometimes lower). With the Coronavirus crisis, building models is key part of any serious investing companies. Anh Thomas Investment is no exception and we are building models to find where the best opportunities will arise and also try to determine when these opportunities will appear. In other words, is it a right time to buy US stocks? Is it the right time to buy Vietnamese stocks? Or can it be a right time to buy French stocks while you should avoid Italian ones? A lot of questions for investors and as usual only time will show who made the right decisions.

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