Correlation Between Ba Ria and Binh Minh
Can any of the company-specific risk be diversified away by investing in both Ba Ria and Binh Minh 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 Ba Ria and Binh Minh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ba Ria Thermal and Binh Minh Plastics, you can compare the effects of market volatilities on Ba Ria and Binh Minh 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 Ba Ria with a short position of Binh Minh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ba Ria and Binh Minh.
Diversification Opportunities for Ba Ria and Binh Minh
Very weak diversification
The 3 months correlation between BTP and Binh is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Ba Ria Thermal and Binh Minh Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Minh Plastics and Ba Ria 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 Ba Ria Thermal are associated (or correlated) with Binh Minh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Minh Plastics has no effect on the direction of Ba Ria i.e., Ba Ria and Binh Minh go up and down completely randomly.
Pair Corralation between Ba Ria and Binh Minh
Assuming the 90 days trading horizon Ba Ria Thermal is expected to generate 0.4 times more return on investment than Binh Minh. However, Ba Ria Thermal is 2.51 times less risky than Binh Minh. It trades about -0.03 of its potential returns per unit of risk. Binh Minh Plastics is currently generating about -0.16 per unit of risk. If you would invest 1,200,000 in Ba Ria Thermal on November 7, 2024 and sell it today you would lose (5,000) from holding Ba Ria Thermal or give up 0.42% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ba Ria Thermal vs. Binh Minh Plastics
Performance |
| Timeline |
| Ba Ria Thermal |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Binh Minh Plastics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Ba Ria and Binh Minh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ba Ria and Binh Minh
The main advantage of trading using opposite Ba Ria and Binh Minh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ba Ria position performs unexpectedly, Binh Minh 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 Binh Minh will offset losses from the drop in Binh Minh's long position.The idea behind Ba Ria Thermal and Binh Minh Plastics 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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