Correlation Between Kien Giang and Danang Education
Can any of the company-specific risk be diversified away by investing in both Kien Giang and Danang Education 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 Danang Education 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 Danang Education Investment, you can compare the effects of market volatilities on Kien Giang and Danang Education 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 Danang Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kien Giang and Danang Education.
Diversification Opportunities for Kien Giang and Danang Education
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Kien and Danang is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Kien Giang Construction and Danang Education Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Education Inv 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 Danang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Education Inv has no effect on the direction of Kien Giang i.e., Kien Giang and Danang Education go up and down completely randomly.
Pair Corralation between Kien Giang and Danang Education
Assuming the 90 days trading horizon Kien Giang Construction is expected to under-perform the Danang Education. But the stock apears to be less risky and, when comparing its historical volatility, Kien Giang Construction is 1.67 times less risky than Danang Education. The stock trades about -0.52 of its potential returns per unit of risk. The Danang Education Investment is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest 1,930,000 in Danang Education Investment on November 9, 2024 and sell it today you would lose (60,000) from holding Danang Education Investment or give up 3.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kien Giang Construction vs. Danang Education Investment
Performance |
| Timeline |
| Kien Giang Construction |
Risk-Adjusted Performance
Very Weak
Weak | Strong |
| Danang Education Inv |
Risk-Adjusted Performance
Weak
Weak | Strong |
Kien Giang and Danang Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kien Giang and Danang Education
The main advantage of trading using opposite Kien Giang and Danang Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kien Giang position performs unexpectedly, Danang Education 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 Danang Education will offset losses from the drop in Danang Education's long position.The idea behind Kien Giang Construction and Danang Education Investment 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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