Correlation Between Development Investment and Dong A
Can any of the company-specific risk be diversified away by investing in both Development Investment and Dong A 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 Development Investment and Dong A into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Development Investment Construction and Dong A Hotel, you can compare the effects of market volatilities on Development Investment and Dong A 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 Development Investment with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Development Investment and Dong A.
Diversification Opportunities for Development Investment and Dong A
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Development and Dong is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Development Investment Constru and Dong A Hotel in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong A Hotel and Development Investment 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 Development Investment Construction are associated (or correlated) with Dong A. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong A Hotel has no effect on the direction of Development Investment i.e., Development Investment and Dong A go up and down completely randomly.
Pair Corralation between Development Investment and Dong A
Assuming the 90 days trading horizon Development Investment Construction is expected to under-perform the Dong A. In addition to that, Development Investment is 5.78 times more volatile than Dong A Hotel. It trades about -0.09 of its total potential returns per unit of risk. Dong A Hotel is currently generating about -0.11 per unit of volatility. 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 |
Development Investment Constru vs. Dong A Hotel
Performance |
| Timeline |
| Development Investment |
| Dong A Hotel |
Development Investment and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Development Investment and Dong A
The main advantage of trading using opposite Development Investment and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Development Investment position performs unexpectedly, Dong A 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 Dong A will offset losses from the drop in Dong A's long position.| Development Investment vs. Pha Le Plastics | Development Investment vs. Petrolimex Petrochemical JSC | Development Investment vs. Tien Phong Plastic | Development Investment vs. Hai An Transport |
| Dong A vs. Idico JSC | Dong A vs. Hochiminh City Metal | Dong A vs. Atesco Industrial Cartering | Dong A vs. Danang Education Investment |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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