Correlation Between Ben Thanh and Mechanics Construction
Can any of the company-specific risk be diversified away by investing in both Ben Thanh and Mechanics Construction 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 Ben Thanh and Mechanics Construction into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ben Thanh Rubber and Mechanics Construction and, you can compare the effects of market volatilities on Ben Thanh and Mechanics Construction 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 Ben Thanh with a short position of Mechanics Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ben Thanh and Mechanics Construction.
Diversification Opportunities for Ben Thanh and Mechanics Construction
-0.61 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Ben and Mechanics is -0.61. Overlapping area represents the amount of risk that can be diversified away by holding Ben Thanh Rubber and Mechanics Construction and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mechanics Construction and Ben Thanh 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 Ben Thanh Rubber are associated (or correlated) with Mechanics Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mechanics Construction has no effect on the direction of Ben Thanh i.e., Ben Thanh and Mechanics Construction go up and down completely randomly.
Pair Corralation between Ben Thanh and Mechanics Construction
Assuming the 90 days trading horizon Ben Thanh Rubber is expected to generate 0.9 times more return on investment than Mechanics Construction. However, Ben Thanh Rubber is 1.11 times less risky than Mechanics Construction. It trades about 0.05 of its potential returns per unit of risk. Mechanics Construction and is currently generating about 0.04 per unit of risk. If you would invest 907,689 in Ben Thanh Rubber on September 2, 2024 and sell it today you would earn a total of 497,311 from holding Ben Thanh Rubber or generate 54.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 91.26% |
| Values | Daily Returns |
Ben Thanh Rubber vs. Mechanics Construction and
Performance |
| Timeline |
| Ben Thanh Rubber |
| Mechanics Construction |
Ben Thanh and Mechanics Construction Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ben Thanh and Mechanics Construction
The main advantage of trading using opposite Ben Thanh and Mechanics Construction positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ben Thanh position performs unexpectedly, Mechanics Construction 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 Mechanics Construction will offset losses from the drop in Mechanics Construction's long position.| Ben Thanh vs. FIT INVEST JSC | Ben Thanh vs. Damsan JSC | Ben Thanh vs. An Phat Plastic | Ben Thanh vs. Alphanam ME |
| Mechanics Construction vs. FIT INVEST JSC | Mechanics Construction vs. Damsan JSC | Mechanics Construction vs. An Phat Plastic | Mechanics Construction 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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