Correlation Between South Basic and Danang Rubber
Can any of the company-specific risk be diversified away by investing in both South Basic and Danang Rubber 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 Danang Rubber 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 Danang Rubber JSC, you can compare the effects of market volatilities on South Basic and Danang Rubber 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 Danang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Basic and Danang Rubber.
Diversification Opportunities for South Basic and Danang Rubber
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between South and Danang is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and Danang Rubber JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Rubber 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 Danang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Rubber JSC has no effect on the direction of South Basic i.e., South Basic and Danang Rubber go up and down completely randomly.
Pair Corralation between South Basic and Danang Rubber
Assuming the 90 days trading horizon South Basic is expected to generate 2.84 times less return on investment than Danang Rubber. In addition to that, South Basic is 1.93 times more volatile than Danang Rubber JSC. It trades about 0.02 of its total potential returns per unit of risk. Danang Rubber JSC is currently generating about 0.14 per unit of volatility. If you would invest 2,770,000 in Danang Rubber JSC on November 29, 2024 and sell it today you would earn a total of 75,000 from holding Danang Rubber JSC or generate 2.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
South Basic Chemicals vs. Danang Rubber JSC
Performance |
| Timeline |
| South Basic Chemicals |
| Danang Rubber JSC |
South Basic and Danang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Basic and Danang Rubber
The main advantage of trading using opposite South Basic and Danang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Basic position performs unexpectedly, Danang Rubber 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 Rubber will offset losses from the drop in Danang Rubber's long position.| South Basic vs. Elcom Technology Communications | South Basic vs. Fecon Mining JSC | South Basic vs. PC3 Investment JSC | South Basic vs. Tien Giang Investment |
| Danang Rubber vs. HVC Investment and | Danang Rubber vs. Vien Dong Investment | Danang Rubber vs. Asia Pacific Investment | Danang Rubber vs. Binh Duong Trade |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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