Correlation Between Danang Rubber and Dong A
Can any of the company-specific risk be diversified away by investing in both Danang Rubber 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 Danang Rubber and Dong A 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 Dong A Hotel, you can compare the effects of market volatilities on Danang Rubber 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 Danang Rubber with a short position of Dong A. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Rubber and Dong A.
Diversification Opportunities for Danang Rubber and Dong A
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Danang and Dong is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Danang Rubber JSC 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 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 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 Danang Rubber i.e., Danang Rubber and Dong A go up and down completely randomly.
Pair Corralation between Danang Rubber and Dong A
Assuming the 90 days trading horizon Danang Rubber is expected to generate 1.0 times less return on investment than Dong A. But when comparing it to its historical volatility, Danang Rubber JSC is 2.19 times less risky than Dong A. It trades about 0.25 of its potential returns per unit of risk. Dong A Hotel is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 342,000 in Dong A Hotel on November 8, 2024 and sell it today you would earn a total of 16,000 from holding Dong A Hotel or generate 4.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Danang Rubber JSC vs. Dong A Hotel
Performance |
| Timeline |
| Danang Rubber JSC |
| Dong A Hotel |
Danang Rubber and Dong A Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danang Rubber and Dong A
The main advantage of trading using opposite Danang Rubber and Dong A positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danang Rubber 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.| Danang Rubber vs. Vinhomes JSC | Danang Rubber vs. Saigon Telecommunication Technologies | Danang Rubber vs. Fecon Mining JSC | Danang Rubber vs. Hanoi Plastics JSC |
| Dong A vs. Bao Ngoc Investment | Dong A vs. Hcd Investment Producing | Dong A vs. Vincom Retail JSC | Dong A 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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