Correlation Between Da Nang and Hai An
Can any of the company-specific risk be diversified away by investing in both Da Nang and Hai An 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 Da Nang and Hai An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Da Nang Construction and Hai An Transport, you can compare the effects of market volatilities on Da Nang and Hai An 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 Da Nang with a short position of Hai An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da Nang and Hai An.
Diversification Opportunities for Da Nang and Hai An
Modest diversification
The 3 months correlation between DXV and Hai is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Da Nang Construction and Hai An Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hai An Transport and Da Nang 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 Da Nang Construction are associated (or correlated) with Hai An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hai An Transport has no effect on the direction of Da Nang i.e., Da Nang and Hai An go up and down completely randomly.
Pair Corralation between Da Nang and Hai An
Assuming the 90 days trading horizon Da Nang Construction is expected to under-perform the Hai An. In addition to that, Da Nang is 1.34 times more volatile than Hai An Transport. It trades about -0.08 of its total potential returns per unit of risk. Hai An Transport is currently generating about 0.09 per unit of volatility. If you would invest 4,750,000 in Hai An Transport on September 16, 2024 and sell it today you would earn a total of 190,000 from holding Hai An Transport or generate 4.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Da Nang Construction vs. Hai An Transport
Performance |
| Timeline |
| Da Nang Construction |
| Hai An Transport |
Da Nang and Hai An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Da Nang and Hai An
The main advantage of trading using opposite Da Nang and Hai An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Da Nang position performs unexpectedly, Hai An 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 Hai An will offset losses from the drop in Hai An's long position.| Da Nang vs. Hai An Transport | Da Nang vs. Tng Investment And | Da Nang vs. Ba Ria Thermal | Da Nang vs. Binhthuan Agriculture Services |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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