Correlation Between South Basic and BIDV Securities
Can any of the company-specific risk be diversified away by investing in both South Basic and BIDV Securities 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 South Basic and BIDV Securities into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between South Basic Chemicals and BIDV Securities JSC, you can compare the effects of market volatilities on South Basic and BIDV Securities 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 South Basic with a short position of BIDV Securities. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Basic and BIDV Securities.
Diversification Opportunities for South Basic and BIDV Securities
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between South and BIDV is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and BIDV Securities JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIDV Securities JSC and South Basic 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 South Basic Chemicals are associated (or correlated) with BIDV Securities. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIDV Securities JSC has no effect on the direction of South Basic i.e., South Basic and BIDV Securities go up and down completely randomly.
Pair Corralation between South Basic and BIDV Securities
Assuming the 90 days trading horizon South Basic Chemicals is expected to generate 1.19 times more return on investment than BIDV Securities. However, South Basic is 1.19 times more volatile than BIDV Securities JSC. It trades about 0.05 of its potential returns per unit of risk. BIDV Securities JSC is currently generating about -0.02 per unit of risk. If you would invest 3,880,000 in South Basic Chemicals on November 2, 2024 and sell it today you would earn a total of 340,000 from holding South Basic Chemicals or generate 8.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
South Basic Chemicals vs. BIDV Securities JSC
Performance |
| Timeline |
| South Basic Chemicals |
| BIDV Securities JSC |
South Basic and BIDV Securities Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Basic and BIDV Securities
The main advantage of trading using opposite South Basic and BIDV Securities positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Basic position performs unexpectedly, BIDV Securities 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 BIDV Securities will offset losses from the drop in BIDV Securities' long position.| South Basic vs. Dong A Hotel | South Basic vs. Saigon Viendong Technology | South Basic vs. Ha Noi Education | South Basic vs. Phuoc Hoa Rubber |
| BIDV Securities vs. Nafoods Group JSC | BIDV Securities vs. Tienlen Steel Corp | BIDV Securities vs. Da Nang Construction | BIDV Securities vs. VietinBank Securities JSC |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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