Correlation Between Hanoi Beer and Hochiminh City
Can any of the company-specific risk be diversified away by investing in both Hanoi Beer 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 Hanoi Beer and Hochiminh City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hanoi Beer Trading and Hochiminh City Metal, you can compare the effects of market volatilities on Hanoi Beer 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 Hanoi Beer with a short position of Hochiminh City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanoi Beer and Hochiminh City.
Diversification Opportunities for Hanoi Beer and Hochiminh City
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hanoi and Hochiminh is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Hanoi Beer Trading 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 Hanoi Beer 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 Hanoi Beer Trading 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 Hanoi Beer i.e., Hanoi Beer and Hochiminh City go up and down completely randomly.
Pair Corralation between Hanoi Beer and Hochiminh City
Assuming the 90 days trading horizon Hanoi Beer Trading is expected to generate 2.62 times more return on investment than Hochiminh City. However, Hanoi Beer is 2.62 times more volatile than Hochiminh City Metal. It trades about 0.07 of its potential returns per unit of risk. Hochiminh City Metal is currently generating about 0.04 per unit of risk. If you would invest 2,111,898 in Hanoi Beer Trading on December 4, 2024 and sell it today you would earn a total of 1,768,102 from holding Hanoi Beer Trading or generate 83.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 60.69% |
| Values | Daily Returns |
Hanoi Beer Trading vs. Hochiminh City Metal
Performance |
| Timeline |
| Hanoi Beer Trading |
| Hochiminh City Metal |
Hanoi Beer and Hochiminh City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hanoi Beer and Hochiminh City
The main advantage of trading using opposite Hanoi Beer and Hochiminh City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hanoi Beer 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.| Hanoi Beer vs. Innovative Technology Development | Hanoi Beer vs. SCG Construction JSC | Hanoi Beer vs. Vnsteel Vicasa JSC | Hanoi Beer vs. Development Investment Construction |
| Hochiminh City vs. PV2 Investment JSC | Hochiminh City vs. Da Nang Construction | Hochiminh City vs. Vien Dong Investment | Hochiminh City vs. Thu Duc TradingImport |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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