Correlation Between Binh Duong and Elcom Technology
Can any of the company-specific risk be diversified away by investing in both Binh Duong and Elcom Technology 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 Binh Duong and Elcom Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binh Duong Construction and Elcom Technology Communications, you can compare the effects of market volatilities on Binh Duong and Elcom Technology 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 Binh Duong with a short position of Elcom Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Duong and Elcom Technology.
Diversification Opportunities for Binh Duong and Elcom Technology
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Binh and Elcom is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Binh Duong Construction and Elcom Technology Communication in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elcom Technology Com and Binh Duong 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 Binh Duong Construction are associated (or correlated) with Elcom Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elcom Technology Com has no effect on the direction of Binh Duong i.e., Binh Duong and Elcom Technology go up and down completely randomly.
Pair Corralation between Binh Duong and Elcom Technology
Assuming the 90 days trading horizon Binh Duong Construction is expected to generate 0.86 times more return on investment than Elcom Technology. However, Binh Duong Construction is 1.16 times less risky than Elcom Technology. It trades about 0.54 of its potential returns per unit of risk. Elcom Technology Communications is currently generating about 0.12 per unit of risk. If you would invest 612,000 in Binh Duong Construction on September 13, 2024 and sell it today you would earn a total of 125,000 from holding Binh Duong Construction or generate 20.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binh Duong Construction vs. Elcom Technology Communication
Performance |
| Timeline |
| Binh Duong Construction |
| Elcom Technology Com |
Binh Duong and Elcom Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binh Duong and Elcom Technology
The main advantage of trading using opposite Binh Duong and Elcom Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binh Duong position performs unexpectedly, Elcom Technology 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 Elcom Technology will offset losses from the drop in Elcom Technology's long position.| Binh Duong vs. FIT INVEST JSC | Binh Duong vs. Damsan JSC | Binh Duong vs. An Phat Plastic | Binh Duong vs. Alphanam ME |
| Elcom Technology vs. FIT INVEST JSC | Elcom Technology vs. Damsan JSC | Elcom Technology vs. An Phat Plastic | Elcom Technology 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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