Correlation Between Hochiminh City and Duc Thanh
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Duc Thanh 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 Duc Thanh 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 Duc Thanh Wood, you can compare the effects of market volatilities on Hochiminh City and Duc Thanh 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 Duc Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Duc Thanh.
Diversification Opportunities for Hochiminh City and Duc Thanh
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Hochiminh and Duc is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Duc Thanh Wood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duc Thanh Wood 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 Duc Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duc Thanh Wood has no effect on the direction of Hochiminh City i.e., Hochiminh City and Duc Thanh go up and down completely randomly.
Pair Corralation between Hochiminh City and Duc Thanh
Assuming the 90 days trading horizon Hochiminh City is expected to generate 6.31 times less return on investment than Duc Thanh. But when comparing it to its historical volatility, Hochiminh City Metal is 1.19 times less risky than Duc Thanh. It trades about 0.03 of its potential returns per unit of risk. Duc Thanh Wood is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,540,909 in Duc Thanh Wood on August 29, 2024 and sell it today you would earn a total of 84,091 from holding Duc Thanh Wood or generate 3.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hochiminh City Metal vs. Duc Thanh Wood
Performance |
| Timeline |
| Hochiminh City Metal |
| Duc Thanh Wood |
Hochiminh City and Duc Thanh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Duc Thanh
The main advantage of trading using opposite Hochiminh City and Duc Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Duc Thanh 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 Duc Thanh will offset losses from the drop in Duc Thanh's long position.| Hochiminh City vs. Saigon Telecommunication Technologies | Hochiminh City vs. Military Insurance Corp | Hochiminh City vs. VietinBank Securities JSC | Hochiminh City vs. Vietnam Dairy Products |
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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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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