Correlation Between Binhthuan Agriculture and Transport

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Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Transport 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 Transport 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 Transport and Industry, you can compare the effects of market volatilities on Binhthuan Agriculture and Transport 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 Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Transport.

Diversification Opportunities for Binhthuan Agriculture and Transport

0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Binhthuan and Transport is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Transport and Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Industry 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport and Industry has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Transport go up and down completely randomly.

Pair Corralation between Binhthuan Agriculture and Transport

Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to generate 0.52 times more return on investment than Transport. However, Binhthuan Agriculture Services is 1.91 times less risky than Transport. It trades about 0.25 of its potential returns per unit of risk. Transport and Industry is currently generating about -0.03 per unit of risk. If you would invest  368,000  in Binhthuan Agriculture Services on August 29, 2024 and sell it today you would earn a total of  23,000  from holding Binhthuan Agriculture Services or generate 6.25% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Binhthuan Agriculture Services  vs.  Transport and Industry

 Performance 
       Timeline  
Binhthuan Agriculture 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Binhthuan Agriculture Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.
Transport and Industry 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Transport and Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Binhthuan Agriculture and Transport Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Binhthuan Agriculture and Transport

The main advantage of trading using opposite Binhthuan Agriculture and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, Transport 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 Transport will offset losses from the drop in Transport's long position.
The idea behind Binhthuan Agriculture Services and Transport and Industry 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.

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