Correlation Between Investment and Binhthuan Agriculture
Can any of the company-specific risk be diversified away by investing in both Investment and Binhthuan Agriculture 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 Investment and Binhthuan Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Investment and Industrial and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Investment and Binhthuan Agriculture 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 Investment with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Investment and Binhthuan Agriculture.
Diversification Opportunities for Investment and Binhthuan Agriculture
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Investment and Binhthuan is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Investment and Industrial and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and Investment 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 Investment and Industrial are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of Investment i.e., Investment and Binhthuan Agriculture go up and down completely randomly.
Pair Corralation between Investment and Binhthuan Agriculture
Assuming the 90 days trading horizon Investment and Industrial is expected to under-perform the Binhthuan Agriculture. In addition to that, Investment is 1.12 times more volatile than Binhthuan Agriculture Services. It trades about -0.41 of its total potential returns per unit of risk. Binhthuan Agriculture Services is currently generating about -0.3 per unit of volatility. If you would invest 431,000 in Binhthuan Agriculture Services on January 22, 2025 and sell it today you would lose (85,000) from holding Binhthuan Agriculture Services or give up 19.72% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Investment and Industrial vs. Binhthuan Agriculture Services
Performance |
| Timeline |
| Investment and Industrial |
| Binhthuan Agriculture |
Investment and Binhthuan Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Investment and Binhthuan Agriculture
The main advantage of trading using opposite Investment and Binhthuan Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Investment position performs unexpectedly, Binhthuan Agriculture 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 Binhthuan Agriculture will offset losses from the drop in Binhthuan Agriculture's long position.| Investment vs. Saigon Beer Alcohol | Investment vs. Asia Commercial Bank | Investment vs. PVI Reinsurance Corp | Investment vs. Vietnam Petroleum Transport |
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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