Correlation Between Da Nang and Japan Vietnam
Can any of the company-specific risk be diversified away by investing in both Da Nang and Japan Vietnam 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 Japan Vietnam 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 Japan Vietnam Medical, you can compare the effects of market volatilities on Da Nang and Japan Vietnam 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 Japan Vietnam. Check out your portfolio center. Please also check ongoing floating volatility patterns of Da Nang and Japan Vietnam.
Diversification Opportunities for Da Nang and Japan Vietnam
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between DXV and Japan is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Da Nang Construction and Japan Vietnam Medical in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Vietnam Medical 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 Japan Vietnam. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Vietnam Medical has no effect on the direction of Da Nang i.e., Da Nang and Japan Vietnam go up and down completely randomly.
Pair Corralation between Da Nang and Japan Vietnam
Assuming the 90 days trading horizon Da Nang is expected to generate 2.02 times less return on investment than Japan Vietnam. In addition to that, Da Nang is 1.52 times more volatile than Japan Vietnam Medical. It trades about 0.01 of its total potential returns per unit of risk. Japan Vietnam Medical is currently generating about 0.04 per unit of volatility. If you would invest 312,000 in Japan Vietnam Medical on October 30, 2024 and sell it today you would earn a total of 96,000 from holding Japan Vietnam Medical or generate 30.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.4% |
| Values | Daily Returns |
Da Nang Construction vs. Japan Vietnam Medical
Performance |
| Timeline |
| Da Nang Construction |
| Japan Vietnam Medical |
Da Nang and Japan Vietnam Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Da Nang and Japan Vietnam
The main advantage of trading using opposite Da Nang and Japan Vietnam positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Da Nang position performs unexpectedly, Japan Vietnam 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 Japan Vietnam will offset losses from the drop in Japan Vietnam's long position.| Da Nang vs. Riverway Management JSC | Da Nang vs. CEO Group JSC | Da Nang vs. Elcom Technology Communications | Da Nang vs. Petrolimex Information Technology |
| Japan Vietnam vs. PostTelecommunication Equipment | Japan Vietnam vs. Military Insurance Corp | Japan Vietnam vs. Hanoi Beer Alcohol | Japan Vietnam vs. Vietnam Petroleum Transport |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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