Correlation Between Kien Giang and Binhthuan Agriculture
Can any of the company-specific risk be diversified away by investing in both Kien Giang and Binhthuan Agriculture 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 Kien Giang and Binhthuan Agriculture into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kien Giang Construction and Binhthuan Agriculture Services, you can compare the effects of market volatilities on Kien Giang and Binhthuan Agriculture 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 Kien Giang with a short position of Binhthuan Agriculture. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kien Giang and Binhthuan Agriculture.
Diversification Opportunities for Kien Giang and Binhthuan Agriculture
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Kien and Binhthuan is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Kien Giang Construction and Binhthuan Agriculture Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binhthuan Agriculture and Kien Giang 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 Kien Giang Construction are associated (or correlated) with Binhthuan Agriculture. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binhthuan Agriculture has no effect on the direction of Kien Giang i.e., Kien Giang and Binhthuan Agriculture go up and down completely randomly.
Pair Corralation between Kien Giang and Binhthuan Agriculture
Assuming the 90 days trading horizon Kien Giang Construction is expected to under-perform the Binhthuan Agriculture. In addition to that, Kien Giang is 2.08 times more volatile than Binhthuan Agriculture Services. It trades about -0.15 of its total potential returns per unit of risk. Binhthuan Agriculture Services is currently generating about 0.27 per unit of volatility. If you would invest 368,000 in Binhthuan Agriculture Services on August 28, 2024 and sell it today you would earn a total of 24,000 from holding Binhthuan Agriculture Services or generate 6.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kien Giang Construction vs. Binhthuan Agriculture Services
Performance |
| Timeline |
| Kien Giang Construction |
| Binhthuan Agriculture |
Kien Giang and Binhthuan Agriculture Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kien Giang and Binhthuan Agriculture
The main advantage of trading using opposite Kien Giang and Binhthuan Agriculture positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kien Giang position performs unexpectedly, Binhthuan Agriculture 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 Binhthuan Agriculture will offset losses from the drop in Binhthuan Agriculture's long position.| Kien Giang vs. FIT INVEST JSC | Kien Giang vs. Damsan JSC | Kien Giang vs. An Phat Plastic | Kien Giang 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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