Correlation Between Dong A and Nafoods Group
Can any of the company-specific risk be diversified away by investing in both Dong A and Nafoods Group 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 Nafoods Group 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 Nafoods Group JSC, you can compare the effects of market volatilities on Dong A and Nafoods Group 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 Nafoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Nafoods Group.
Diversification Opportunities for Dong A and Nafoods Group
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Dong and Nafoods is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Hotel and Nafoods Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nafoods Group JSC 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 Nafoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nafoods Group JSC has no effect on the direction of Dong A i.e., Dong A and Nafoods Group go up and down completely randomly.
Pair Corralation between Dong A and Nafoods Group
Assuming the 90 days trading horizon Dong A Hotel is expected to generate 0.17 times more return on investment than Nafoods Group. However, Dong A Hotel is 6.05 times less risky than Nafoods Group. It trades about -0.15 of its potential returns per unit of risk. Nafoods Group JSC is currently generating about -0.04 per unit of risk. If you would invest 310,000 in Dong A Hotel on August 31, 2024 and sell it today you would lose (4,000) from holding Dong A Hotel or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Dong A Hotel vs. Nafoods Group JSC
Performance |
| Timeline |
| Dong A Hotel |
| Nafoods Group JSC |
Dong A and Nafoods Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Nafoods Group
The main advantage of trading using opposite Dong A and Nafoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Nafoods Group 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 Nafoods Group will offset losses from the drop in Nafoods Group'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 |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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