Correlation Between South Basic and Binh Duong
Can any of the company-specific risk be diversified away by investing in both South Basic and Binh Duong 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 Binh Duong 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 Binh Duong Trade, you can compare the effects of market volatilities on South Basic and Binh Duong 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 Binh Duong. Check out your portfolio center. Please also check ongoing floating volatility patterns of South Basic and Binh Duong.
Diversification Opportunities for South Basic and Binh Duong
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between South and Binh is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding South Basic Chemicals and Binh Duong Trade in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Duong Trade 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 Binh Duong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Duong Trade has no effect on the direction of South Basic i.e., South Basic and Binh Duong go up and down completely randomly.
Pair Corralation between South Basic and Binh Duong
Assuming the 90 days trading horizon South Basic Chemicals is expected to generate 2.82 times more return on investment than Binh Duong. However, South Basic is 2.82 times more volatile than Binh Duong Trade. It trades about 0.03 of its potential returns per unit of risk. Binh Duong Trade is currently generating about 0.08 per unit of risk. If you would invest 3,680,000 in South Basic Chemicals on September 1, 2024 and sell it today you would earn a total of 40,000 from holding South Basic Chemicals or generate 1.09% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
South Basic Chemicals vs. Binh Duong Trade
Performance |
| Timeline |
| South Basic Chemicals |
| Binh Duong Trade |
South Basic and Binh Duong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with South Basic and Binh Duong
The main advantage of trading using opposite South Basic and Binh Duong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if South Basic position performs unexpectedly, Binh Duong 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 Binh Duong will offset losses from the drop in Binh Duong's long position.| South Basic vs. VietinBank Securities JSC | South Basic vs. Everland Investment JSC | South Basic vs. Vina2 Investment and | South Basic vs. Vu Dang Investment |
| Binh Duong vs. Elcom Technology Communications | Binh Duong vs. Post and Telecommunications | Binh Duong vs. South Basic Chemicals | Binh Duong vs. Saigon Telecommunication Technologies |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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