Correlation Between Binhthuan Agriculture and Ha Do
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Ha Do 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 Ha Do 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 Ha Do Group, you can compare the effects of market volatilities on Binhthuan Agriculture and Ha Do 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 Ha Do. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Ha Do.
Diversification Opportunities for Binhthuan Agriculture and Ha Do
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Binhthuan and HDG is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Ha Do Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ha Do Group 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 Ha Do. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ha Do Group has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Ha Do go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and Ha Do
Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to under-perform the Ha Do. But the stock apears to be less risky and, when comparing its historical volatility, Binhthuan Agriculture Services is 2.22 times less risky than Ha Do. The stock trades about -0.18 of its potential returns per unit of risk. The Ha Do Group is currently generating about -0.08 of returns per unit of risk over similar time horizon. If you would invest 4,075,118 in Ha Do Group on August 28, 2024 and sell it today you would lose (1,220,118) from holding Ha Do Group or give up 29.94% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. Ha Do Group
Performance |
| Timeline |
| Binhthuan Agriculture |
| Ha Do Group |
Binhthuan Agriculture and Ha Do Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and Ha Do
The main advantage of trading using opposite Binhthuan Agriculture and Ha Do positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, Ha Do 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 Ha Do will offset losses from the drop in Ha Do's long position.The idea behind Binhthuan Agriculture Services and Ha Do Group 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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