Correlation Between Ha Noi and Hochiminh City
Can any of the company-specific risk be diversified away by investing in both Ha Noi and Hochiminh City 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 Ha Noi and Hochiminh City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ha Noi Education and Hochiminh City Metal, you can compare the effects of market volatilities on Ha Noi and Hochiminh City 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 Ha Noi with a short position of Hochiminh City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ha Noi and Hochiminh City.
Diversification Opportunities for Ha Noi and Hochiminh City
-0.02 | Correlation Coefficient |
Good diversification
The 3 months correlation between EID and Hochiminh is -0.02. Overlapping area represents the amount of risk that can be diversified away by holding Ha Noi Education and Hochiminh City Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochiminh City Metal and Ha Noi 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 Ha Noi Education are associated (or correlated) with Hochiminh City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochiminh City Metal has no effect on the direction of Ha Noi i.e., Ha Noi and Hochiminh City go up and down completely randomly.
Pair Corralation between Ha Noi and Hochiminh City
Assuming the 90 days trading horizon Ha Noi Education is expected to under-perform the Hochiminh City. But the stock apears to be less risky and, when comparing its historical volatility, Ha Noi Education is 1.47 times less risky than Hochiminh City. The stock trades about -0.24 of its potential returns per unit of risk. The Hochiminh City Metal is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 1,100,000 in Hochiminh City Metal on August 27, 2024 and sell it today you would lose (20,000) from holding Hochiminh City Metal or give up 1.82% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.48% |
| Values | Daily Returns |
Ha Noi Education vs. Hochiminh City Metal
Performance |
| Timeline |
| Ha Noi Education |
| Hochiminh City Metal |
Ha Noi and Hochiminh City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ha Noi and Hochiminh City
The main advantage of trading using opposite Ha Noi and Hochiminh City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ha Noi position performs unexpectedly, Hochiminh City 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 Hochiminh City will offset losses from the drop in Hochiminh City's long position.| Ha Noi vs. Long An Food | Ha Noi vs. Sea Air Freight | Ha Noi vs. BaoMinh Insurance Corp | Ha Noi vs. PVI Reinsurance Corp |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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