Correlation Between Binhthuan Agriculture and BaoMinh Insurance
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and BaoMinh Insurance 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 Binhthuan Agriculture and BaoMinh Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binhthuan Agriculture Services and BaoMinh Insurance Corp, you can compare the effects of market volatilities on Binhthuan Agriculture and BaoMinh Insurance 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 Binhthuan Agriculture with a short position of BaoMinh Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and BaoMinh Insurance.
Diversification Opportunities for Binhthuan Agriculture and BaoMinh Insurance
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Binhthuan and BaoMinh is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and BaoMinh Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BaoMinh Insurance Corp and Binhthuan Agriculture 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 Binhthuan Agriculture Services are associated (or correlated) with BaoMinh Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BaoMinh Insurance Corp has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and BaoMinh Insurance go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and BaoMinh Insurance
Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to generate 1.97 times more return on investment than BaoMinh Insurance. However, Binhthuan Agriculture is 1.97 times more volatile than BaoMinh Insurance Corp. It trades about 0.14 of its potential returns per unit of risk. BaoMinh Insurance Corp is currently generating about -0.01 per unit of risk. If you would invest 383,000 in Binhthuan Agriculture Services on October 17, 2024 and sell it today you would earn a total of 65,000 from holding Binhthuan Agriculture Services or generate 16.97% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. BaoMinh Insurance Corp
Performance |
| Timeline |
| Binhthuan Agriculture |
| BaoMinh Insurance Corp |
Binhthuan Agriculture and BaoMinh Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and BaoMinh Insurance
The main advantage of trading using opposite Binhthuan Agriculture and BaoMinh Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, BaoMinh Insurance 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 BaoMinh Insurance will offset losses from the drop in BaoMinh Insurance's long position.The idea behind Binhthuan Agriculture Services and BaoMinh Insurance Corp 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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Check out your portfolio center.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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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