Correlation Between Binhthuan Agriculture and Vietnam National
Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Vietnam National 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 National 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 National Reinsurance, you can compare the effects of market volatilities on Binhthuan Agriculture and Vietnam National 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 National. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Vietnam National.
Diversification Opportunities for Binhthuan Agriculture and Vietnam National
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Binhthuan and Vietnam is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Vietnam National Reinsurance in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam National Rei 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 National. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam National Rei has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Vietnam National go up and down completely randomly.
Pair Corralation between Binhthuan Agriculture and Vietnam National
Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to generate 1.88 times more return on investment than Vietnam National. However, Binhthuan Agriculture is 1.88 times more volatile than Vietnam National Reinsurance. It trades about 0.2 of its potential returns per unit of risk. Vietnam National Reinsurance is currently generating about -0.07 per unit of risk. If you would invest 379,000 in Binhthuan Agriculture Services on August 31, 2024 and sell it today you would earn a total of 16,000 from holding Binhthuan Agriculture Services or generate 4.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binhthuan Agriculture Services vs. Vietnam National Reinsurance
Performance |
| Timeline |
| Binhthuan Agriculture |
| Vietnam National Rei |
Binhthuan Agriculture and Vietnam National Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binhthuan Agriculture and Vietnam National
The main advantage of trading using opposite Binhthuan Agriculture and Vietnam National positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binhthuan Agriculture position performs unexpectedly, Vietnam National 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 National will offset losses from the drop in Vietnam National's long position.| Binhthuan Agriculture vs. FIT INVEST JSC | Binhthuan Agriculture vs. Damsan JSC | Binhthuan Agriculture vs. An Phat Plastic | Binhthuan Agriculture vs. Alphanam ME |
| Vietnam National vs. FIT INVEST JSC | Vietnam National vs. Damsan JSC | Vietnam National vs. An Phat Plastic | Vietnam National vs. Alphanam ME |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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