Correlation Between Thanh Dat and Vien Dong
Can any of the company-specific risk be diversified away by investing in both Thanh Dat and Vien Dong 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 Thanh Dat and Vien Dong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thanh Dat Investment and Vien Dong Investment, you can compare the effects of market volatilities on Thanh Dat and Vien Dong 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 Thanh Dat with a short position of Vien Dong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thanh Dat and Vien Dong.
Diversification Opportunities for Thanh Dat and Vien Dong
Very good diversification
The 3 months correlation between Thanh and Vien is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Thanh Dat Investment and Vien Dong Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vien Dong Investment and Thanh Dat 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 Thanh Dat Investment are associated (or correlated) with Vien Dong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vien Dong Investment has no effect on the direction of Thanh Dat i.e., Thanh Dat and Vien Dong go up and down completely randomly.
Pair Corralation between Thanh Dat and Vien Dong
Assuming the 90 days trading horizon Thanh Dat Investment is expected to under-perform the Vien Dong. But the stock apears to be less risky and, when comparing its historical volatility, Thanh Dat Investment is 1.2 times less risky than Vien Dong. The stock trades about -0.18 of its potential returns per unit of risk. The Vien Dong Investment is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 494,000 in Vien Dong Investment on November 7, 2024 and sell it today you would earn a total of 44,000 from holding Vien Dong Investment or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Thanh Dat Investment vs. Vien Dong Investment
Performance |
| Timeline |
| Thanh Dat Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Vien Dong Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
Thanh Dat and Vien Dong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thanh Dat and Vien Dong
The main advantage of trading using opposite Thanh Dat and Vien Dong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thanh Dat position performs unexpectedly, Vien Dong 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 Vien Dong will offset losses from the drop in Vien Dong's long position.The idea behind Thanh Dat Investment and Vien Dong Investment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk 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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