Correlation Between Bao Ngoc and Vietnam Dairy
Can any of the company-specific risk be diversified away by investing in both Bao Ngoc and Vietnam Dairy 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 Bao Ngoc and Vietnam Dairy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bao Ngoc Investment and Vietnam Dairy Products, you can compare the effects of market volatilities on Bao Ngoc and Vietnam Dairy 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 Bao Ngoc with a short position of Vietnam Dairy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bao Ngoc and Vietnam Dairy.
Diversification Opportunities for Bao Ngoc and Vietnam Dairy
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Bao and Vietnam is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Bao Ngoc Investment and Vietnam Dairy Products in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam Dairy Products and Bao Ngoc 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 Bao Ngoc Investment are associated (or correlated) with Vietnam Dairy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam Dairy Products has no effect on the direction of Bao Ngoc i.e., Bao Ngoc and Vietnam Dairy go up and down completely randomly.
Pair Corralation between Bao Ngoc and Vietnam Dairy
Assuming the 90 days trading horizon Bao Ngoc Investment is expected to generate 2.18 times more return on investment than Vietnam Dairy. However, Bao Ngoc is 2.18 times more volatile than Vietnam Dairy Products. It trades about 0.01 of its potential returns per unit of risk. Vietnam Dairy Products is currently generating about 0.01 per unit of risk. If you would invest 1,032,000 in Bao Ngoc Investment on August 31, 2024 and sell it today you would lose (52,000) from holding Bao Ngoc Investment or give up 5.04% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bao Ngoc Investment vs. Vietnam Dairy Products
Performance |
| Timeline |
| Bao Ngoc Investment |
| Vietnam Dairy Products |
Bao Ngoc and Vietnam Dairy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bao Ngoc and Vietnam Dairy
The main advantage of trading using opposite Bao Ngoc and Vietnam Dairy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bao Ngoc position performs unexpectedly, Vietnam Dairy 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 Dairy will offset losses from the drop in Vietnam Dairy's long position.| Bao Ngoc vs. FIT INVEST JSC | Bao Ngoc vs. Damsan JSC | Bao Ngoc vs. An Phat Plastic | Bao Ngoc vs. Alphanam ME |
| Vietnam Dairy vs. Nam Kim Steel | Vietnam Dairy vs. Duong Hieu Trading | Vietnam Dairy vs. Bao Ngoc Investment | Vietnam Dairy vs. Everland Investment JSC |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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