Correlation Between CEO Group and Van Dien
Can any of the company-specific risk be diversified away by investing in both CEO Group and Van Dien 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 CEO Group and Van Dien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CEO Group JSC and Van Dien Fused, you can compare the effects of market volatilities on CEO Group and Van Dien 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 CEO Group with a short position of Van Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of CEO Group and Van Dien.
Diversification Opportunities for CEO Group and Van Dien
Excellent diversification
The 3 months correlation between CEO and Van is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding CEO Group JSC and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused and CEO Group 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 CEO Group JSC are associated (or correlated) with Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of CEO Group i.e., CEO Group and Van Dien go up and down completely randomly.
Pair Corralation between CEO Group and Van Dien
Assuming the 90 days trading horizon CEO Group is expected to generate 3.89 times less return on investment than Van Dien. But when comparing it to its historical volatility, CEO Group JSC is 1.34 times less risky than Van Dien. It trades about 0.03 of its potential returns per unit of risk. Van Dien Fused is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 647,442 in Van Dien Fused on September 16, 2024 and sell it today you would earn a total of 752,558 from holding Van Dien Fused or generate 116.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 70.53% |
| Values | Daily Returns |
CEO Group JSC vs. Van Dien Fused
Performance |
| Timeline |
| CEO Group JSC |
| Van Dien Fused |
CEO Group and Van Dien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CEO Group and Van Dien
The main advantage of trading using opposite CEO Group and Van Dien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CEO Group position performs unexpectedly, Van Dien 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 Van Dien will offset losses from the drop in Van Dien's long position.| CEO Group vs. Techno Agricultural Supplying | CEO Group vs. Picomat Plastic JSC | CEO Group vs. Danang Rubber JSC | CEO Group vs. Vietnam Rubber Group |
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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 Global Correlations module to find global opportunities by holding instruments from different markets.
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