Correlation Between Ben Thanh and Pha Le
Can any of the company-specific risk be diversified away by investing in both Ben Thanh and Pha Le 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 Pha Le 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 Pha Le Plastics, you can compare the effects of market volatilities on Ben Thanh and Pha Le 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 Pha Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ben Thanh and Pha Le.
Diversification Opportunities for Ben Thanh and Pha Le
Pay attention - limited upside
The 3 months correlation between Ben and Pha is -0.87. Overlapping area represents the amount of risk that can be diversified away by holding Ben Thanh Rubber and Pha Le Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Le Plastics 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 Pha Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Le Plastics has no effect on the direction of Ben Thanh i.e., Ben Thanh and Pha Le go up and down completely randomly.
Pair Corralation between Ben Thanh and Pha Le
Assuming the 90 days trading horizon Ben Thanh Rubber is expected to generate 0.83 times more return on investment than Pha Le. However, Ben Thanh Rubber is 1.21 times less risky than Pha Le. It trades about 0.23 of its potential returns per unit of risk. Pha Le Plastics is currently generating about -0.15 per unit of risk. If you would invest 1,335,000 in Ben Thanh Rubber on August 24, 2024 and sell it today you would earn a total of 75,000 from holding Ben Thanh Rubber or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Ben Thanh Rubber vs. Pha Le Plastics
Performance |
| Timeline |
| Ben Thanh Rubber |
| Pha Le Plastics |
Ben Thanh and Pha Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ben Thanh and Pha Le
The main advantage of trading using opposite Ben Thanh and Pha Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ben Thanh position performs unexpectedly, Pha Le 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 Le will offset losses from the drop in Pha Le's long position.| Ben Thanh vs. FIT INVEST JSC | Ben Thanh vs. Damsan JSC | Ben Thanh vs. An Phat Plastic | Ben Thanh vs. APG Securities Joint |
| Pha Le vs. FIT INVEST JSC | Pha Le vs. Damsan JSC | Pha Le vs. An Phat Plastic | Pha Le 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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