Correlation Between Hanoi Beer and Vien Dong
Can any of the company-specific risk be diversified away by investing in both Hanoi Beer and Vien Dong 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 Hanoi Beer and Vien Dong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanoi Beer Alcohol and Vien Dong Investment, you can compare the effects of market volatilities on Hanoi Beer and Vien Dong 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 Hanoi Beer with a short position of Vien Dong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanoi Beer and Vien Dong.
Diversification Opportunities for Hanoi Beer and Vien Dong
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hanoi and Vien is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hanoi Beer Alcohol and Vien Dong Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vien Dong Investment and Hanoi Beer 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 Hanoi Beer Alcohol are associated (or correlated) with Vien Dong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vien Dong Investment has no effect on the direction of Hanoi Beer i.e., Hanoi Beer and Vien Dong go up and down completely randomly.
Pair Corralation between Hanoi Beer and Vien Dong
Assuming the 90 days trading horizon Hanoi Beer is expected to generate 5.18 times less return on investment than Vien Dong. But when comparing it to its historical volatility, Hanoi Beer Alcohol is 1.21 times less risky than Vien Dong. It trades about 0.0 of its potential returns per unit of risk. Vien Dong Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 494,237 in Vien Dong Investment on November 9, 2024 and sell it today you would earn a total of 15,763 from holding Vien Dong Investment or generate 3.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 89.53% |
| Values | Daily Returns |
Hanoi Beer Alcohol vs. Vien Dong Investment
Performance |
| Timeline |
| Hanoi Beer Alcohol |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Vien Dong Investment |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
Hanoi Beer and Vien Dong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanoi Beer and Vien Dong
The main advantage of trading using opposite Hanoi Beer and Vien Dong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanoi Beer position performs unexpectedly, Vien Dong 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 Vien Dong will offset losses from the drop in Vien Dong's long position.The idea behind Hanoi Beer Alcohol and Vien Dong Investment 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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