Correlation Between Danang Rubber and Dong Nai
Can any of the company-specific risk be diversified away by investing in both Danang Rubber and Dong Nai 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 Nai 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 Nai Plastic, you can compare the effects of market volatilities on Danang Rubber and Dong Nai 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 Nai. Check out your portfolio center. Please also check ongoing floating volatility patterns of Danang Rubber and Dong Nai.
Diversification Opportunities for Danang Rubber and Dong Nai
-0.19 | Correlation Coefficient |
Good diversification
The 3 months correlation between Danang and Dong is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Danang Rubber JSC and Dong Nai Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dong Nai Plastic 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 Nai. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dong Nai Plastic has no effect on the direction of Danang Rubber i.e., Danang Rubber and Dong Nai go up and down completely randomly.
Pair Corralation between Danang Rubber and Dong Nai
Assuming the 90 days trading horizon Danang Rubber is expected to generate 1.85 times less return on investment than Dong Nai. But when comparing it to its historical volatility, Danang Rubber JSC is 2.13 times less risky than Dong Nai. It trades about 0.03 of its potential returns per unit of risk. Dong Nai Plastic is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 2,050,000 in Dong Nai Plastic on August 30, 2024 and sell it today you would earn a total of 10,000 from holding Dong Nai Plastic or generate 0.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 82.61% |
| Values | Daily Returns |
Danang Rubber JSC vs. Dong Nai Plastic
Performance |
| Timeline |
| Danang Rubber JSC |
| Dong Nai Plastic |
Danang Rubber and Dong Nai Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Danang Rubber and Dong Nai
The main advantage of trading using opposite Danang Rubber and Dong Nai positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Danang Rubber position performs unexpectedly, Dong Nai 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 Nai will offset losses from the drop in Dong Nai'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 |
| Dong Nai vs. FIT INVEST JSC | Dong Nai vs. Damsan JSC | Dong Nai vs. An Phat Plastic | Dong Nai vs. Alphanam ME |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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