Correlation Between Ben Thanh and Hung Hau
Can any of the company-specific risk be diversified away by investing in both Ben Thanh and Hung Hau 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 Hung Hau 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 Hung Hau Agricultural, you can compare the effects of market volatilities on Ben Thanh and Hung Hau 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 Hung Hau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ben Thanh and Hung Hau.
Diversification Opportunities for Ben Thanh and Hung Hau
Very good diversification
The 3 months correlation between Ben and Hung is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Ben Thanh Rubber and Hung Hau Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Hau Agricultural 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 Hung Hau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Hau Agricultural has no effect on the direction of Ben Thanh i.e., Ben Thanh and Hung Hau go up and down completely randomly.
Pair Corralation between Ben Thanh and Hung Hau
Assuming the 90 days trading horizon Ben Thanh Rubber is expected to generate 0.18 times more return on investment than Hung Hau. However, Ben Thanh Rubber is 5.67 times less risky than Hung Hau. It trades about 0.18 of its potential returns per unit of risk. Hung Hau Agricultural is currently generating about 0.01 per unit of risk. If you would invest 1,195,000 in Ben Thanh Rubber on November 7, 2024 and sell it today you would earn a total of 240,000 from holding Ben Thanh Rubber or generate 20.08% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 59.66% |
| Values | Daily Returns |
Ben Thanh Rubber vs. Hung Hau Agricultural
Performance |
| Timeline |
| Ben Thanh Rubber |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
| Hung Hau Agricultural |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
Ben Thanh and Hung Hau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ben Thanh and Hung Hau
The main advantage of trading using opposite Ben Thanh and Hung Hau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ben Thanh position performs unexpectedly, Hung Hau 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 Hung Hau will offset losses from the drop in Hung Hau's long position.The idea behind Ben Thanh Rubber and Hung Hau Agricultural 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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