Correlation Between Dong A and Van Dien
Can any of the company-specific risk be diversified away by investing in both Dong A and Van Dien 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 Van Dien 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 Van Dien Fused, you can compare the effects of market volatilities on Dong A and Van Dien 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 Van Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dong A and Van Dien.
Diversification Opportunities for Dong A and Van Dien
Excellent diversification
The 3 months correlation between Dong and Van is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Dong A Hotel and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused 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 Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of Dong A i.e., Dong A and Van Dien go up and down completely randomly.
Pair Corralation between Dong A and Van Dien
Assuming the 90 days trading horizon Dong A Hotel is expected to under-perform the Van Dien. But the stock apears to be less risky and, when comparing its historical volatility, Dong A Hotel is 3.18 times less risky than Van Dien. The stock trades about -0.12 of its potential returns per unit of risk. The Van Dien Fused is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 1,140,261 in Van Dien Fused on September 14, 2024 and sell it today you would earn a total of 189,739 from holding Van Dien Fused or generate 16.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 72.76% |
| Values | Daily Returns |
Dong A Hotel vs. Van Dien Fused
Performance |
| Timeline |
| Dong A Hotel |
| Van Dien Fused |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Dong A and Van Dien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dong A and Van Dien
The main advantage of trading using opposite Dong A and Van Dien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dong A position performs unexpectedly, Van Dien 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 Van Dien will offset losses from the drop in Van Dien'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 |
| Van Dien vs. Elcom Technology Communications | Van Dien vs. Materials Petroleum JSC | Van Dien vs. Danang Rubber JSC | Van Dien vs. FPT Digital Retail |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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