Correlation Between Cotec Construction and BaoMinh Insurance
Can any of the company-specific risk be diversified away by investing in both Cotec Construction and BaoMinh Insurance 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 BaoMinh Insurance 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 BaoMinh Insurance Corp, you can compare the effects of market volatilities on Cotec Construction and BaoMinh Insurance 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 BaoMinh Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cotec Construction and BaoMinh Insurance.
Diversification Opportunities for Cotec Construction and BaoMinh Insurance
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Cotec and BaoMinh is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Cotec Construction JSC and BaoMinh Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BaoMinh Insurance Corp 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 BaoMinh Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BaoMinh Insurance Corp has no effect on the direction of Cotec Construction i.e., Cotec Construction and BaoMinh Insurance go up and down completely randomly.
Pair Corralation between Cotec Construction and BaoMinh Insurance
Assuming the 90 days trading horizon Cotec Construction JSC is expected to generate 1.4 times more return on investment than BaoMinh Insurance. However, Cotec Construction is 1.4 times more volatile than BaoMinh Insurance Corp. It trades about 0.1 of its potential returns per unit of risk. BaoMinh Insurance Corp is currently generating about 0.01 per unit of risk. If you would invest 2,656,306 in Cotec Construction JSC on October 30, 2024 and sell it today you would earn a total of 4,673,694 from holding Cotec Construction JSC or generate 175.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cotec Construction JSC vs. BaoMinh Insurance Corp
Performance |
| Timeline |
| Cotec Construction JSC |
| BaoMinh Insurance Corp |
Cotec Construction and BaoMinh Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cotec Construction and BaoMinh Insurance
The main advantage of trading using opposite Cotec Construction and BaoMinh Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cotec Construction position performs unexpectedly, BaoMinh Insurance 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 BaoMinh Insurance will offset losses from the drop in BaoMinh Insurance's long position.| Cotec Construction vs. Petrolimex Insurance Corp | Cotec Construction vs. Danang Rubber JSC | Cotec Construction vs. Transimex Transportation JSC | Cotec Construction vs. Pacific Petroleum Transportation |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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