Correlation Between Dong A and An Phat
Can any of the company-specific risk be diversified away by investing in both Dong A and An Phat 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 Dong A and An Phat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dong A Hotel and An Phat Plastic, you can compare the effects of market volatilities on Dong A and An Phat 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 Dong A with a short position of An Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and An Phat.
Diversification Opportunities for Dong A and An Phat
Modest diversification
The 3 months correlation between Dong and AAA is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Hotel and An Phat Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Phat Plastic and Dong A 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 Dong A Hotel are associated (or correlated) with An Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Phat Plastic has no effect on the direction of Dong A i.e., Dong A and An Phat go up and down completely randomly.
Pair Corralation between Dong A and An Phat
Assuming the 90 days trading horizon Dong A Hotel is expected to generate 1.58 times more return on investment than An Phat. However, Dong A is 1.58 times more volatile than An Phat Plastic. It trades about 0.11 of its potential returns per unit of risk. An Phat Plastic is currently generating about 0.12 per unit of risk. If you would invest 342,000 in Dong A Hotel on November 8, 2024 and sell it today you would earn a total of 16,000 from holding Dong A Hotel or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 94.44% |
| Values | Daily Returns |
Dong A Hotel vs. An Phat Plastic
Performance |
| Timeline |
| Dong A Hotel |
| An Phat Plastic |
Dong A and An Phat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and An Phat
The main advantage of trading using opposite Dong A and An Phat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, An Phat 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 An Phat will offset losses from the drop in An Phat's long position.| Dong A vs. Bao Ngoc Investment | Dong A vs. Hcd Investment Producing | Dong A vs. Vincom Retail JSC | Dong A vs. FPT Digital Retail |
| An Phat vs. Ha Long Investment | An Phat vs. LDG Investment JSC | An Phat vs. Danang Rubber JSC | An Phat vs. Binh Minh Plastics |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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