Correlation Between Dong A and Danang Education
Can any of the company-specific risk be diversified away by investing in both Dong A and Danang Education 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 Danang Education 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 Danang Education Investment, you can compare the effects of market volatilities on Dong A and Danang Education 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 Danang Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Danang Education.
Diversification Opportunities for Dong A and Danang Education
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Dong and Danang is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Hotel and Danang Education Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Education Inv 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 Danang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Education Inv has no effect on the direction of Dong A i.e., Dong A and Danang Education go up and down completely randomly.
Pair Corralation between Dong A and Danang Education
Assuming the 90 days trading horizon Dong A Hotel is expected to generate 0.99 times more return on investment than Danang Education. However, Dong A Hotel is 1.01 times less risky than Danang Education. It trades about 0.14 of its potential returns per unit of risk. Danang Education Investment is currently generating about -0.16 per unit of risk. If you would invest 307,000 in Dong A Hotel on October 17, 2024 and sell it today you would earn a total of 32,000 from holding Dong A Hotel or generate 10.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Hotel vs. Danang Education Investment
Performance |
| Timeline |
| Dong A Hotel |
| Danang Education Inv |
Dong A and Danang Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Danang Education
The main advantage of trading using opposite Dong A and Danang Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Danang Education 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 Education will offset losses from the drop in Danang Education's long position.| Dong A vs. Tien Phong Plastic | Dong A vs. An Phat Holdings | Dong A vs. FPT Corp | Dong A vs. POST TELECOMMU |
| Danang Education vs. Dong A Hotel | Danang Education vs. Hanoi Plastics JSC | Danang Education vs. Fecon Mining JSC | Danang Education vs. Century Synthetic Fiber |
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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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