Correlation Between Hochiminh City and Development Investment
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Development Investment 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 Development Investment 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 Development Investment Construction, you can compare the effects of market volatilities on Hochiminh City and Development Investment 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 Development Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Development Investment.
Diversification Opportunities for Hochiminh City and Development Investment
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hochiminh and Development is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Development Investment Constru in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Development Investment 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 Development Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Development Investment has no effect on the direction of Hochiminh City i.e., Hochiminh City and Development Investment go up and down completely randomly.
Pair Corralation between Hochiminh City and Development Investment
Assuming the 90 days trading horizon Hochiminh City is expected to generate 1.29 times less return on investment than Development Investment. In addition to that, Hochiminh City is 3.1 times more volatile than Development Investment Construction. It trades about 0.06 of its total potential returns per unit of risk. Development Investment Construction is currently generating about 0.25 per unit of volatility. If you would invest 1,540,000 in Development Investment Construction on October 12, 2024 and sell it today you would earn a total of 70,000 from holding Development Investment Construction or generate 4.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 76.19% |
| Values | Daily Returns |
Hochiminh City Metal vs. Development Investment Constru
Performance |
| Timeline |
| Hochiminh City Metal |
| Development Investment |
Hochiminh City and Development Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Development Investment
The main advantage of trading using opposite Hochiminh City and Development Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Development Investment 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 Development Investment will offset losses from the drop in Development Investment's long position.| Hochiminh City vs. Petrolimex Information Technology | Hochiminh City vs. Vnsteel Vicasa JSC | Hochiminh City vs. Ducgiang Chemicals Detergent | Hochiminh City vs. Nam Kim Steel |
| Development Investment vs. Hochiminh City Metal | Development Investment vs. VietinBank Securities JSC | Development Investment vs. Vu Dang Investment | Development Investment vs. Duong Hieu Trading |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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