Correlation Between Foreign Trade and Ben Thanh
Can any of the company-specific risk be diversified away by investing in both Foreign Trade and Ben Thanh 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 Foreign Trade and Ben Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Foreign Trade Development and Ben Thanh Rubber, you can compare the effects of market volatilities on Foreign Trade and Ben Thanh 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 Foreign Trade with a short position of Ben Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Foreign Trade and Ben Thanh.
Diversification Opportunities for Foreign Trade and Ben Thanh
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Foreign and Ben is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Foreign Trade Development and Ben Thanh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ben Thanh Rubber and Foreign Trade 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 Foreign Trade Development are associated (or correlated) with Ben Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ben Thanh Rubber has no effect on the direction of Foreign Trade i.e., Foreign Trade and Ben Thanh go up and down completely randomly.
Pair Corralation between Foreign Trade and Ben Thanh
Assuming the 90 days trading horizon Foreign Trade Development is expected to generate 0.2 times more return on investment than Ben Thanh. However, Foreign Trade Development is 5.02 times less risky than Ben Thanh. It trades about 0.35 of its potential returns per unit of risk. Ben Thanh Rubber is currently generating about -0.01 per unit of risk. If you would invest 1,680,000 in Foreign Trade Development on October 28, 2024 and sell it today you would earn a total of 10,000 from holding Foreign Trade Development or generate 0.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 40.0% |
| Values | Daily Returns |
Foreign Trade Development vs. Ben Thanh Rubber
Performance |
| Timeline |
| Foreign Trade Development |
| Ben Thanh Rubber |
Foreign Trade and Ben Thanh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Foreign Trade and Ben Thanh
The main advantage of trading using opposite Foreign Trade and Ben Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Foreign Trade position performs unexpectedly, Ben Thanh 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 Ben Thanh will offset losses from the drop in Ben Thanh's long position.| Foreign Trade vs. FIT INVEST JSC | Foreign Trade vs. Damsan JSC | Foreign Trade vs. An Phat Plastic | Foreign Trade vs. APG Securities Joint |
| Ben Thanh vs. FIT INVEST JSC | Ben Thanh vs. Damsan JSC | Ben Thanh vs. An Phat Plastic | Ben Thanh vs. APG Securities Joint |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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