Correlation Between Duc Thanh and Idico JSC
Can any of the company-specific risk be diversified away by investing in both Duc Thanh and Idico JSC 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 Duc Thanh and Idico JSC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Duc Thanh Wood and Idico JSC, you can compare the effects of market volatilities on Duc Thanh and Idico JSC 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 Duc Thanh with a short position of Idico JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Duc Thanh and Idico JSC.
Diversification Opportunities for Duc Thanh and Idico JSC
Very weak diversification
The 3 months correlation between Duc and Idico is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Duc Thanh Wood and Idico JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idico JSC and Duc Thanh 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 Duc Thanh Wood are associated (or correlated) with Idico JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idico JSC has no effect on the direction of Duc Thanh i.e., Duc Thanh and Idico JSC go up and down completely randomly.
Pair Corralation between Duc Thanh and Idico JSC
Assuming the 90 days trading horizon Duc Thanh is expected to generate 1.06 times less return on investment than Idico JSC. But when comparing it to its historical volatility, Duc Thanh Wood is 1.47 times less risky than Idico JSC. It trades about 0.15 of its potential returns per unit of risk. Idico JSC is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 5,340,000 in Idico JSC on August 29, 2024 and sell it today you would earn a total of 180,000 from holding Idico JSC or generate 3.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Duc Thanh Wood vs. Idico JSC
Performance |
| Timeline |
| Duc Thanh Wood |
| Idico JSC |
Duc Thanh and Idico JSC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Duc Thanh and Idico JSC
The main advantage of trading using opposite Duc Thanh and Idico JSC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Duc Thanh position performs unexpectedly, Idico JSC 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 Idico JSC will offset losses from the drop in Idico JSC's long position.| Duc Thanh vs. FIT INVEST JSC | Duc Thanh vs. Damsan JSC | Duc Thanh vs. An Phat Plastic | Duc Thanh vs. APG Securities Joint |
| Idico JSC vs. FIT INVEST JSC | Idico JSC vs. Damsan JSC | Idico JSC vs. An Phat Plastic | Idico JSC 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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