Correlation Between Hochiminh City and An Phat
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and An Phat 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 Hochiminh City and An Phat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hochiminh City Metal and An Phat Plastic, you can compare the effects of market volatilities on Hochiminh City and An Phat 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 Hochiminh City with a short position of An Phat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and An Phat.
Diversification Opportunities for Hochiminh City and An Phat
0.09 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Hochiminh and AAA is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and An Phat Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on An Phat Plastic and Hochiminh City 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 Hochiminh City Metal are associated (or correlated) with An Phat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of An Phat Plastic has no effect on the direction of Hochiminh City i.e., Hochiminh City and An Phat go up and down completely randomly.
Pair Corralation between Hochiminh City and An Phat
Assuming the 90 days trading horizon Hochiminh City Metal is expected to generate 3.06 times more return on investment than An Phat. However, Hochiminh City is 3.06 times more volatile than An Phat Plastic. It trades about 0.05 of its potential returns per unit of risk. An Phat Plastic is currently generating about -0.05 per unit of risk. If you would invest 1,140,000 in Hochiminh City Metal on October 20, 2024 and sell it today you would earn a total of 25,000 from holding Hochiminh City Metal or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochiminh City Metal vs. An Phat Plastic
Performance |
| Timeline |
| Hochiminh City Metal |
| An Phat Plastic |
Hochiminh City and An Phat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and An Phat
The main advantage of trading using opposite Hochiminh City and An Phat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, An Phat 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 An Phat will offset losses from the drop in An Phat's long position.| Hochiminh City vs. Development Investment Construction | Hochiminh City vs. Kien Giang Construction | Hochiminh City vs. Ducgiang Chemicals Detergent | Hochiminh City vs. Binhthuan Agriculture Services |
| An Phat vs. Vinhomes JSC | An Phat vs. Pacific Petroleum Transportation | An Phat vs. Song Hong Construction | An Phat vs. Ducgiang Chemicals Detergent |
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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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