Correlation Between Hai An and Hochiminh City
Can any of the company-specific risk be diversified away by investing in both Hai An and Hochiminh City 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 Hochiminh City 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 Hochiminh City Metal, you can compare the effects of market volatilities on Hai An and Hochiminh City 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 Hochiminh City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hai An and Hochiminh City.
Diversification Opportunities for Hai An and Hochiminh City
-0.41 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hai and Hochiminh is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Hai An Transport and Hochiminh City Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochiminh City Metal 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 Hochiminh City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochiminh City Metal has no effect on the direction of Hai An i.e., Hai An and Hochiminh City go up and down completely randomly.
Pair Corralation between Hai An and Hochiminh City
Assuming the 90 days trading horizon Hai An Transport is expected to generate 2.72 times more return on investment than Hochiminh City. However, Hai An is 2.72 times more volatile than Hochiminh City Metal. It trades about 0.19 of its potential returns per unit of risk. Hochiminh City Metal is currently generating about -0.05 per unit of risk. If you would invest 4,320,000 in Hai An Transport on August 28, 2024 and sell it today you would earn a total of 385,000 from holding Hai An Transport or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hai An Transport vs. Hochiminh City Metal
Performance |
| Timeline |
| Hai An Transport |
| Hochiminh City Metal |
Hai An and Hochiminh City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hai An and Hochiminh City
The main advantage of trading using opposite Hai An and Hochiminh City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hai An position performs unexpectedly, Hochiminh City 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 Hochiminh City will offset losses from the drop in Hochiminh City's long position.| Hai An vs. FIT INVEST JSC | Hai An vs. Damsan JSC | Hai An vs. An Phat Plastic | Hai An vs. APG Securities Joint |
| Hochiminh City vs. Tri Viet Management | Hochiminh City vs. Tay Ninh Rubber | Hochiminh City vs. Hanoi Plastics JSC | Hochiminh City vs. Post and Telecommunications |
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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