Correlation Between Hai An and Binh Duong
Can any of the company-specific risk be diversified away by investing in both Hai An 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 Hai An and Binh Duong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hai An Transport and Binh Duong Construction, you can compare the effects of market volatilities on Hai An 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 Hai An with a short position of Binh Duong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hai An and Binh Duong.
Diversification Opportunities for Hai An and Binh Duong
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Hai and Binh is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport 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 Hai An 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 Hai An Transport 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 Hai An i.e., Hai An and Binh Duong go up and down completely randomly.
Pair Corralation between Hai An and Binh Duong
Assuming the 90 days trading horizon Hai An is expected to generate 2.31 times less return on investment than Binh Duong. In addition to that, Hai An is 1.43 times more volatile than Binh Duong Construction. It trades about 0.11 of its total potential returns per unit of risk. Binh Duong Construction is currently generating about 0.38 per unit of volatility. If you would invest 653,000 in Binh Duong Construction on September 18, 2024 and sell it today you would earn a total of 80,000 from holding Binh Duong Construction or generate 12.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
Hai An Transport vs. Binh Duong Construction
Performance |
| Timeline |
| Hai An Transport |
| Binh Duong Construction |
Hai An and Binh Duong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hai An and Binh Duong
The main advantage of trading using opposite Hai An and Binh Duong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hai An 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 Hai An Transport 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.| Binh Duong vs. Elcom Technology Communications | Binh Duong vs. Post and Telecommunications | Binh Duong vs. Ducgiang Chemicals Detergent | Binh Duong vs. Hai An 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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