Correlation Between Binhthuan Agriculture and Post
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Post 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 Post 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 Post and Telecommunications, you can compare the effects of market volatilities on Binhthuan Agriculture and Post 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 Post. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Post.
Diversification Opportunities for Binhthuan Agriculture and Post
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Binhthuan and Post is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Post and Telecommunications in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Post and Telecommuni 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 Post. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Post and Telecommuni has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Post go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and Post
Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to under-perform the Post. But the stock apears to be less risky and, when comparing its historical volatility, Binhthuan Agriculture Services is 1.22 times less risky than Post. The stock trades about -0.07 of its potential returns per unit of risk. The Post and Telecommunications is currently generating about -0.05 of returns per unit of risk over similar time horizon. If you would invest 771,000 in Post and Telecommunications on August 28, 2024 and sell it today you would lose (311,000) from holding Post and Telecommunications or give up 40.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. Post and Telecommunications
Performance |
| Timeline |
| Binhthuan Agriculture |
| Post and Telecommuni |
Binhthuan Agriculture and Post Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and Post
The main advantage of trading using opposite Binhthuan Agriculture and Post positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, Post 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 Post will offset losses from the drop in Post's long position.The idea behind Binhthuan Agriculture Services and Post and Telecommunications 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.
| Post vs. Construction And Investment | Post vs. Binhthuan Agriculture Services | Post vs. Danang Education Investment | Post vs. Agriculture Printing and |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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