Correlation Between Danang Rubber and Bao Ngoc
Can any of the company-specific risk be diversified away by investing in both Danang Rubber and Bao Ngoc 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 Danang Rubber and Bao Ngoc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Danang Rubber JSC and Bao Ngoc Investment, you can compare the effects of market volatilities on Danang Rubber and Bao Ngoc 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 Danang Rubber with a short position of Bao Ngoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Rubber and Bao Ngoc.
Diversification Opportunities for Danang Rubber and Bao Ngoc
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Danang and Bao is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Danang Rubber JSC and Bao Ngoc Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bao Ngoc Investment and Danang Rubber 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 Danang Rubber JSC are associated (or correlated) with Bao Ngoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bao Ngoc Investment has no effect on the direction of Danang Rubber i.e., Danang Rubber and Bao Ngoc go up and down completely randomly.
Pair Corralation between Danang Rubber and Bao Ngoc
Assuming the 90 days trading horizon Danang Rubber JSC is expected to generate 0.47 times more return on investment than Bao Ngoc. However, Danang Rubber JSC is 2.12 times less risky than Bao Ngoc. It trades about -0.24 of its potential returns per unit of risk. Bao Ngoc Investment is currently generating about -0.45 per unit of risk. If you would invest 2,920,000 in Danang Rubber JSC on October 28, 2024 and sell it today you would lose (145,000) from holding Danang Rubber JSC or give up 4.97% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danang Rubber JSC vs. Bao Ngoc Investment
Performance |
| Timeline |
| Danang Rubber JSC |
| Bao Ngoc Investment |
Danang Rubber and Bao Ngoc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danang Rubber and Bao Ngoc
The main advantage of trading using opposite Danang Rubber and Bao Ngoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danang Rubber position performs unexpectedly, Bao Ngoc 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 Bao Ngoc will offset losses from the drop in Bao Ngoc's long position.| Danang Rubber vs. FIT INVEST JSC | Danang Rubber vs. Damsan JSC | Danang Rubber vs. An Phat Plastic | Danang Rubber vs. APG Securities Joint |
| Bao Ngoc vs. FIT INVEST JSC | Bao Ngoc vs. Damsan JSC | Bao Ngoc vs. An Phat Plastic | Bao Ngoc vs. APG Securities Joint |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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