Correlation Between Binhthuan Agriculture and DIC Holdings
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and DIC Holdings 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 DIC Holdings 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 DIC Holdings Construction, you can compare the effects of market volatilities on Binhthuan Agriculture and DIC Holdings 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 DIC Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and DIC Holdings.
Diversification Opportunities for Binhthuan Agriculture and DIC Holdings
-0.38 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Binhthuan and DIC is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and DIC Holdings Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DIC Holdings Construction 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 DIC Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DIC Holdings Construction has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and DIC Holdings go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and DIC Holdings
Assuming the 90 days trading horizon Binhthuan Agriculture is expected to generate 6.89 times less return on investment than DIC Holdings. But when comparing it to its historical volatility, Binhthuan Agriculture Services is 2.14 times less risky than DIC Holdings. It trades about 0.08 of its potential returns per unit of risk. DIC Holdings Construction is currently generating about 0.27 of returns per unit of risk over similar time horizon. If you would invest 1,075,000 in DIC Holdings Construction on August 24, 2024 and sell it today you would earn a total of 220,000 from holding DIC Holdings Construction or generate 20.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. DIC Holdings Construction
Performance |
| Timeline |
| Binhthuan Agriculture |
| DIC Holdings Construction |
Binhthuan Agriculture and DIC Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and DIC Holdings
The main advantage of trading using opposite Binhthuan Agriculture and DIC Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, DIC Holdings 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 DIC Holdings will offset losses from the drop in DIC Holdings' long position.The idea behind Binhthuan Agriculture Services and DIC Holdings Construction 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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