Correlation Between Binhthuan Agriculture and Vietnam Technological
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Vietnam Technological 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 Vietnam Technological 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 Vietnam Technological And, you can compare the effects of market volatilities on Binhthuan Agriculture and Vietnam Technological 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 Vietnam Technological. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Vietnam Technological.
Diversification Opportunities for Binhthuan Agriculture and Vietnam Technological
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Binhthuan and Vietnam is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Vietnam Technological And in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Technological And 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 Vietnam Technological. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Technological And has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Vietnam Technological go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and Vietnam Technological
Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to under-perform the Vietnam Technological. In addition to that, Binhthuan Agriculture is 1.81 times more volatile than Vietnam Technological And. It trades about -0.02 of its total potential returns per unit of risk. Vietnam Technological And is currently generating about 0.19 per unit of volatility. If you would invest 2,360,000 in Vietnam Technological And on November 7, 2024 and sell it today you would earn a total of 93,000 from holding Vietnam Technological And or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. Vietnam Technological And
Performance |
| Timeline |
| Binhthuan Agriculture |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
| Vietnam Technological And |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Binhthuan Agriculture and Vietnam Technological Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and Vietnam Technological
The main advantage of trading using opposite Binhthuan Agriculture and Vietnam Technological positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, Vietnam Technological 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 Vietnam Technological will offset losses from the drop in Vietnam Technological's long position.The idea behind Binhthuan Agriculture Services and Vietnam Technological And 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.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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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