Correlation Between Dong A and DOMESCO Medical
Can any of the company-specific risk be diversified away by investing in both Dong A and DOMESCO Medical 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 DOMESCO Medical 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 DOMESCO Medical Import, you can compare the effects of market volatilities on Dong A and DOMESCO Medical 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 DOMESCO Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and DOMESCO Medical.
Diversification Opportunities for Dong A and DOMESCO Medical
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dong and DOMESCO is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Hotel and DOMESCO Medical Import in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DOMESCO Medical Import 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 DOMESCO Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DOMESCO Medical Import has no effect on the direction of Dong A i.e., Dong A and DOMESCO Medical go up and down completely randomly.
Pair Corralation between Dong A and DOMESCO Medical
Assuming the 90 days trading horizon Dong A Hotel is expected to under-perform the DOMESCO Medical. But the stock apears to be less risky and, when comparing its historical volatility, Dong A Hotel is 1.26 times less risky than DOMESCO Medical. The stock trades about -0.07 of its potential returns per unit of risk. The DOMESCO Medical Import is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 5,496,429 in DOMESCO Medical Import on October 22, 2024 and sell it today you would earn a total of 1,853,571 from holding DOMESCO Medical Import or generate 33.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 84.78% |
| Values | Daily Returns |
Dong A Hotel vs. DOMESCO Medical Import
Performance |
| Timeline |
| Dong A Hotel |
| DOMESCO Medical Import |
Dong A and DOMESCO Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and DOMESCO Medical
The main advantage of trading using opposite Dong A and DOMESCO Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, DOMESCO Medical 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 DOMESCO Medical will offset losses from the drop in DOMESCO Medical's long position.| Dong A vs. Transimex Transportation JSC | Dong A vs. Post and Telecommunications | Dong A vs. PetroVietnam Transportation Corp | Dong A vs. Transport and Industry |
| DOMESCO Medical vs. Dong A Hotel | DOMESCO Medical vs. Thanh Dat Investment | DOMESCO Medical vs. Long Giang Investment | DOMESCO Medical vs. Sea Air Freight |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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