Correlation Between Hai An and Thanh Dat
Can any of the company-specific risk be diversified away by investing in both Hai An and Thanh Dat 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 Thanh Dat 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 Thanh Dat Investment, you can compare the effects of market volatilities on Hai An and Thanh Dat 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 Thanh Dat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hai An and Thanh Dat.
Diversification Opportunities for Hai An and Thanh Dat
Very poor diversification
The 3 months correlation between Hai and Thanh is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and Thanh Dat Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Dat Investment 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 Thanh Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Dat Investment has no effect on the direction of Hai An i.e., Hai An and Thanh Dat go up and down completely randomly.
Pair Corralation between Hai An and Thanh Dat
Assuming the 90 days trading horizon Hai An Transport is expected to generate 1.08 times more return on investment than Thanh Dat. However, Hai An is 1.08 times more volatile than Thanh Dat Investment. It trades about 0.16 of its potential returns per unit of risk. Thanh Dat Investment is currently generating about 0.0 per unit of risk. If you would invest 4,685,000 in Hai An Transport on September 12, 2024 and sell it today you would earn a total of 385,000 from holding Hai An Transport or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.65% |
| Values | Daily Returns |
Hai An Transport vs. Thanh Dat Investment
Performance |
| Timeline |
| Hai An Transport |
| Thanh Dat Investment |
Hai An and Thanh Dat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hai An and Thanh Dat
The main advantage of trading using opposite Hai An and Thanh Dat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hai An position performs unexpectedly, Thanh Dat 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 Thanh Dat will offset losses from the drop in Thanh Dat's long position.The idea behind Hai An Transport and Thanh Dat Investment 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.| Thanh Dat vs. FIT INVEST JSC | Thanh Dat vs. Damsan JSC | Thanh Dat vs. An Phat Plastic | Thanh Dat vs. Alphanam ME |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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