Correlation Between Binhthuan Agriculture and Sao Vang
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Sao Vang 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 Sao Vang 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 Sao Vang Rubber, you can compare the effects of market volatilities on Binhthuan Agriculture and Sao Vang 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 Sao Vang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Sao Vang.
Diversification Opportunities for Binhthuan Agriculture and Sao Vang
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Binhthuan and Sao is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Sao Vang Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sao Vang Rubber 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 Sao Vang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sao Vang Rubber has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Sao Vang go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and Sao Vang
Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to generate 0.29 times more return on investment than Sao Vang. However, Binhthuan Agriculture Services is 3.5 times less risky than Sao Vang. It trades about 0.2 of its potential returns per unit of risk. Sao Vang Rubber is currently generating about -0.12 per unit of risk. If you would invest 368,000 in Binhthuan Agriculture Services on August 27, 2024 and sell it today you would earn a total of 17,000 from holding Binhthuan Agriculture Services or generate 4.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 66.67% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. Sao Vang Rubber
Performance |
| Timeline |
| Binhthuan Agriculture |
| Sao Vang Rubber |
Binhthuan Agriculture and Sao Vang Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and Sao Vang
The main advantage of trading using opposite Binhthuan Agriculture and Sao Vang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, Sao Vang 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 Sao Vang will offset losses from the drop in Sao Vang's long position.The idea behind Binhthuan Agriculture Services and Sao Vang Rubber 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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