Correlation Between FPT Digital and Binh Duong
Can any of the company-specific risk be diversified away by investing in both FPT Digital and Binh Duong 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 FPT Digital and Binh Duong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FPT Digital Retail and Binh Duong Construction, you can compare the effects of market volatilities on FPT Digital and Binh Duong 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 FPT Digital with a short position of Binh Duong. Check out your portfolio center. Please also check ongoing floating volatility patterns of FPT Digital and Binh Duong.
Diversification Opportunities for FPT Digital and Binh Duong
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between FPT and Binh is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding FPT Digital Retail and Binh Duong Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Duong Construction and FPT Digital 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 FPT Digital Retail are associated (or correlated) with Binh Duong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Duong Construction has no effect on the direction of FPT Digital i.e., FPT Digital and Binh Duong go up and down completely randomly.
Pair Corralation between FPT Digital and Binh Duong
Assuming the 90 days trading horizon FPT Digital is expected to generate 2.61 times less return on investment than Binh Duong. But when comparing it to its historical volatility, FPT Digital Retail is 1.74 times less risky than Binh Duong. It trades about 0.26 of its potential returns per unit of risk. Binh Duong Construction is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 612,000 in Binh Duong Construction on November 6, 2024 and sell it today you would earn a total of 345,000 from holding Binh Duong Construction or generate 56.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FPT Digital Retail vs. Binh Duong Construction
Performance |
| Timeline |
| FPT Digital Retail |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Binh Duong Construction |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Strong
FPT Digital and Binh Duong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FPT Digital and Binh Duong
The main advantage of trading using opposite FPT Digital and Binh Duong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FPT Digital position performs unexpectedly, Binh Duong 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 Binh Duong will offset losses from the drop in Binh Duong's long position.The idea behind FPT Digital Retail and Binh Duong Construction 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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