Correlation Between Binhthuan Agriculture and Quang Nam
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Quang Nam 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 Quang Nam 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 Quang Nam Transportation, you can compare the effects of market volatilities on Binhthuan Agriculture and Quang Nam 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 Quang Nam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Quang Nam.
Diversification Opportunities for Binhthuan Agriculture and Quang Nam
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Binhthuan and Quang is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Quang Nam Transportation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Quang Nam Transportation 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 Quang Nam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Quang Nam Transportation has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Quang Nam go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and Quang Nam
Assuming the 90 days trading horizon Binhthuan Agriculture is expected to generate 7.41 times less return on investment than Quang Nam. But when comparing it to its historical volatility, Binhthuan Agriculture Services is 4.78 times less risky than Quang Nam. It trades about 0.2 of its potential returns per unit of risk. Quang Nam Transportation is currently generating about 0.31 of returns per unit of risk over similar time horizon. If you would invest 1,560,000 in Quang Nam Transportation on August 27, 2024 and sell it today you would earn a total of 200,000 from holding Quang Nam Transportation or generate 12.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 38.1% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. Quang Nam Transportation
Performance |
| Timeline |
| Binhthuan Agriculture |
| Quang Nam Transportation |
Binhthuan Agriculture and Quang Nam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and Quang Nam
The main advantage of trading using opposite Binhthuan Agriculture and Quang Nam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, Quang Nam 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 Quang Nam will offset losses from the drop in Quang Nam's long position.The idea behind Binhthuan Agriculture Services and Quang Nam Transportation 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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