Correlation Between Hochiminh City and Danang Rubber
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Danang Rubber 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 Danang Rubber 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 Danang Rubber JSC, you can compare the effects of market volatilities on Hochiminh City and Danang Rubber 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 Danang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Danang Rubber.
Diversification Opportunities for Hochiminh City and Danang Rubber
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hochiminh and Danang is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Danang Rubber JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Rubber JSC 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 Danang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Rubber JSC has no effect on the direction of Hochiminh City i.e., Hochiminh City and Danang Rubber go up and down completely randomly.
Pair Corralation between Hochiminh City and Danang Rubber
Assuming the 90 days trading horizon Hochiminh City is expected to generate 1.31 times less return on investment than Danang Rubber. But when comparing it to its historical volatility, Hochiminh City Metal is 1.3 times less risky than Danang Rubber. It trades about 0.05 of its potential returns per unit of risk. Danang Rubber JSC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,279,721 in Danang Rubber JSC on September 2, 2024 and sell it today you would earn a total of 575,279 from holding Danang Rubber JSC or generate 25.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochiminh City Metal vs. Danang Rubber JSC
Performance |
| Timeline |
| Hochiminh City Metal |
| Danang Rubber JSC |
Hochiminh City and Danang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Danang Rubber
The main advantage of trading using opposite Hochiminh City and Danang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Danang Rubber 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 Danang Rubber will offset losses from the drop in Danang Rubber's long position.| Hochiminh City vs. FIT INVEST JSC | Hochiminh City vs. Damsan JSC | Hochiminh City vs. An Phat Plastic | Hochiminh City vs. Alphanam ME |
| Danang Rubber vs. FIT INVEST JSC | Danang Rubber vs. Damsan JSC | Danang Rubber vs. An Phat Plastic | Danang Rubber 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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