Correlation Between Binhthuan Agriculture and Southern Rubber
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Southern Rubber 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 Southern Rubber 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 Southern Rubber Industry, you can compare the effects of market volatilities on Binhthuan Agriculture and Southern Rubber 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 Southern Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Southern Rubber.
Diversification Opportunities for Binhthuan Agriculture and Southern Rubber
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Binhthuan and Southern is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Southern Rubber Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Southern Rubber Industry 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 Southern Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Southern Rubber Industry has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Southern Rubber go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and Southern Rubber
Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to under-perform the Southern Rubber. In addition to that, Binhthuan Agriculture is 1.06 times more volatile than Southern Rubber Industry. It trades about -0.02 of its total potential returns per unit of risk. Southern Rubber Industry is currently generating about 0.01 per unit of volatility. If you would invest 1,374,270 in Southern Rubber Industry on November 5, 2024 and sell it today you would earn a total of 60,730 from holding Southern Rubber Industry or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.78% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. Southern Rubber Industry
Performance |
| Timeline |
| Binhthuan Agriculture |
| Southern Rubber Industry |
Binhthuan Agriculture and Southern Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and Southern Rubber
The main advantage of trading using opposite Binhthuan Agriculture and Southern Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, Southern Rubber 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 Southern Rubber will offset losses from the drop in Southern Rubber's long position.| Binhthuan Agriculture vs. Vu Dang Investment | Binhthuan Agriculture vs. Tien Giang Investment | Binhthuan Agriculture vs. Thanh Dat Investment | Binhthuan Agriculture vs. Vina2 Investment and |
| Southern Rubber vs. Danang Education Investment | Southern Rubber vs. Tien Phong Plastic | Southern Rubber vs. Asia Pacific Investment | Southern Rubber vs. Post and Telecommunications |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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