Correlation Between Danang Rubber and South Basic
Can any of the company-specific risk be diversified away by investing in both Danang Rubber and South Basic 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 South Basic 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 South Basic Chemicals, you can compare the effects of market volatilities on Danang Rubber and South Basic 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 South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Rubber and South Basic.
Diversification Opportunities for Danang Rubber and South Basic
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Danang and South is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Danang Rubber JSC and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals 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 South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of Danang Rubber i.e., Danang Rubber and South Basic go up and down completely randomly.
Pair Corralation between Danang Rubber and South Basic
Assuming the 90 days trading horizon Danang Rubber JSC is expected to generate 0.28 times more return on investment than South Basic. However, Danang Rubber JSC is 3.57 times less risky than South Basic. It trades about 0.05 of its potential returns per unit of risk. South Basic Chemicals is currently generating about -0.07 per unit of risk. If you would invest 2,279,721 in Danang Rubber JSC on September 2, 2024 and sell it today you would earn a total of 575,279 from holding Danang Rubber JSC or generate 25.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danang Rubber JSC vs. South Basic Chemicals
Performance |
| Timeline |
| Danang Rubber JSC |
| South Basic Chemicals |
Danang Rubber and South Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danang Rubber and South Basic
The main advantage of trading using opposite Danang Rubber and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danang Rubber position performs unexpectedly, South Basic 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 South Basic will offset losses from the drop in South Basic's long position.| Danang Rubber vs. FIT INVEST JSC | Danang Rubber vs. Damsan JSC | Danang Rubber vs. An Phat Plastic | Danang Rubber vs. Alphanam ME |
| South Basic vs. Vu Dang Investment | South Basic vs. Thanh Dat Investment | South Basic vs. DOMESCO Medical Import | South Basic vs. Tien Giang 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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