Correlation Between Dong A and Innovative Technology
Can any of the company-specific risk be diversified away by investing in both Dong A and Innovative Technology 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 Innovative Technology 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 Innovative Technology Development, you can compare the effects of market volatilities on Dong A and Innovative Technology 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 Innovative Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Innovative Technology.
Diversification Opportunities for Dong A and Innovative Technology
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Dong and Innovative is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Hotel and Innovative Technology Developm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Innovative Technology 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 Innovative Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Innovative Technology has no effect on the direction of Dong A i.e., Dong A and Innovative Technology go up and down completely randomly.
Pair Corralation between Dong A and Innovative Technology
Assuming the 90 days trading horizon Dong A is expected to generate 20.35 times less return on investment than Innovative Technology. But when comparing it to its historical volatility, Dong A Hotel is 1.7 times less risky than Innovative Technology. It trades about 0.0 of its potential returns per unit of risk. Innovative Technology Development is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,295,000 in Innovative Technology Development on September 16, 2024 and sell it today you would earn a total of 10,000 from holding Innovative Technology Development or generate 0.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Hotel vs. Innovative Technology Developm
Performance |
| Timeline |
| Dong A Hotel |
| Innovative Technology |
Dong A and Innovative Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Innovative Technology
The main advantage of trading using opposite Dong A and Innovative Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Innovative Technology 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 Innovative Technology will offset losses from the drop in Innovative Technology's long position.| Dong A vs. Song Hong Garment | Dong A vs. Alphanam ME | Dong A vs. Hochiminh City Metal | Dong A vs. Atesco Industrial Cartering |
| Innovative Technology vs. FIT INVEST JSC | Innovative Technology vs. Damsan JSC | Innovative Technology vs. An Phat Plastic | Innovative Technology vs. Alphanam ME |
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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