Correlation Between Cotec Construction and Binh Duong
Can any of the company-specific risk be diversified away by investing in both Cotec Construction 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 Cotec Construction and Binh Duong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cotec Construction JSC and Binh Duong Construction, you can compare the effects of market volatilities on Cotec Construction 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 Cotec Construction with a short position of Binh Duong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cotec Construction and Binh Duong.
Diversification Opportunities for Cotec Construction and Binh Duong
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Cotec and Binh is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Cotec Construction JSC and Binh Duong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Duong Construction and Cotec Construction 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 Cotec Construction JSC 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 Construction has no effect on the direction of Cotec Construction i.e., Cotec Construction and Binh Duong go up and down completely randomly.
Pair Corralation between Cotec Construction and Binh Duong
Assuming the 90 days trading horizon Cotec Construction JSC is expected to under-perform the Binh Duong. In addition to that, Cotec Construction is 1.07 times more volatile than Binh Duong Construction. It trades about -0.08 of its total potential returns per unit of risk. Binh Duong Construction is currently generating about 0.45 per unit of volatility. If you would invest 594,000 in Binh Duong Construction on September 2, 2024 and sell it today you would earn a total of 99,000 from holding Binh Duong Construction or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cotec Construction JSC vs. Binh Duong Construction
Performance |
| Timeline |
| Cotec Construction JSC |
| Binh Duong Construction |
Cotec Construction and Binh Duong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cotec Construction and Binh Duong
The main advantage of trading using opposite Cotec Construction and Binh Duong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cotec Construction 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.| Cotec Construction vs. FIT INVEST JSC | Cotec Construction vs. Damsan JSC | Cotec Construction vs. An Phat Plastic | Cotec Construction vs. Alphanam ME |
| Binh Duong vs. FIT INVEST JSC | Binh Duong vs. Damsan JSC | Binh Duong vs. An Phat Plastic | Binh Duong vs. Alphanam ME |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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