Correlation Between Dong A and Development Investment
Can any of the company-specific risk be diversified away by investing in both Dong A and Development Investment 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 Development Investment 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 Development Investment Construction, you can compare the effects of market volatilities on Dong A and Development Investment 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 Development Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Development Investment.
Diversification Opportunities for Dong A and Development Investment
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Dong and Development is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Hotel and Development Investment Constru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Development Investment 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 Development Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Development Investment has no effect on the direction of Dong A i.e., Dong A and Development Investment go up and down completely randomly.
Pair Corralation between Dong A and Development Investment
Assuming the 90 days trading horizon Dong A Hotel is expected to generate 0.17 times more return on investment than Development Investment. However, Dong A Hotel is 5.78 times less risky than Development Investment. It trades about -0.11 of its potential returns per unit of risk. Development Investment Construction is currently generating about -0.09 per unit of risk. If you would invest 310,000 in Dong A Hotel on August 28, 2024 and sell it today you would lose (3,000) from holding Dong A Hotel or give up 0.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 59.09% |
| Values | Daily Returns |
Dong A Hotel vs. Development Investment Constru
Performance |
| Timeline |
| Dong A Hotel |
| Development Investment |
Dong A and Development Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Development Investment
The main advantage of trading using opposite Dong A and Development Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Development Investment 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 Development Investment will offset losses from the drop in Development Investment's long position.| Dong A vs. Idico JSC | Dong A vs. Hochiminh City Metal | Dong A vs. Atesco Industrial Cartering | Dong A vs. Danang Education Investment |
| Development Investment vs. Pha Le Plastics | Development Investment vs. Petrolimex Petrochemical JSC | Development Investment vs. Tien Phong Plastic | Development Investment vs. Hai An Transport |
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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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