Correlation Between Binh Duong and Pha Lai
Can any of the company-specific risk be diversified away by investing in both Binh Duong and Pha Lai 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 Pha Lai 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 Pha Lai Thermal, you can compare the effects of market volatilities on Binh Duong and Pha Lai 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 Pha Lai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Duong and Pha Lai.
Diversification Opportunities for Binh Duong and Pha Lai
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Binh and Pha is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Binh Duong Construction and Pha Lai Thermal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Lai Thermal 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 Pha Lai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Lai Thermal has no effect on the direction of Binh Duong i.e., Binh Duong and Pha Lai go up and down completely randomly.
Pair Corralation between Binh Duong and Pha Lai
Assuming the 90 days trading horizon Binh Duong Construction is expected to generate 0.72 times more return on investment than Pha Lai. However, Binh Duong Construction is 1.39 times less risky than Pha Lai. It trades about 0.08 of its potential returns per unit of risk. Pha Lai Thermal is currently generating about -0.12 per unit of risk. If you would invest 600,000 in Binh Duong Construction on August 25, 2024 and sell it today you would earn a total of 79,000 from holding Binh Duong Construction or generate 13.17% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binh Duong Construction vs. Pha Lai Thermal
Performance |
| Timeline |
| Binh Duong Construction |
| Pha Lai Thermal |
Binh Duong and Pha Lai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binh Duong and Pha Lai
The main advantage of trading using opposite Binh Duong and Pha Lai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binh Duong position performs unexpectedly, Pha Lai 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 Pha Lai will offset losses from the drop in Pha Lai's long position.| Binh Duong vs. Vu Dang Investment | Binh Duong vs. Saigon Viendong Technology | Binh Duong vs. Dinhvu Port Investment | Binh Duong vs. Ipa Investments Group |
| Pha Lai vs. FIT INVEST JSC | Pha Lai vs. Damsan JSC | Pha Lai vs. An Phat Plastic | Pha Lai vs. APG Securities Joint |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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