Correlation Between Hochiminh City and Hanoi Beer
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Hanoi Beer 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 Hanoi Beer 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 Hanoi Beer Trading, you can compare the effects of market volatilities on Hochiminh City and Hanoi Beer 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 Hanoi Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Hanoi Beer.
Diversification Opportunities for Hochiminh City and Hanoi Beer
-0.44 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Hochiminh and Hanoi is -0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Hanoi Beer Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Beer Trading 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 Hanoi Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Beer Trading has no effect on the direction of Hochiminh City i.e., Hochiminh City and Hanoi Beer go up and down completely randomly.
Pair Corralation between Hochiminh City and Hanoi Beer
Assuming the 90 days trading horizon Hochiminh City Metal is expected to generate 1.33 times more return on investment than Hanoi Beer. However, Hochiminh City is 1.33 times more volatile than Hanoi Beer Trading. It trades about 0.05 of its potential returns per unit of risk. Hanoi Beer Trading is currently generating about -0.24 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 Against |
| Strength | Very Weak |
| Accuracy | 40.91% |
| Values | Daily Returns |
Hochiminh City Metal vs. Hanoi Beer Trading
Performance |
| Timeline |
| Hochiminh City Metal |
| Hanoi Beer Trading |
Hochiminh City and Hanoi Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Hanoi Beer
The main advantage of trading using opposite Hochiminh City and Hanoi Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Hanoi Beer 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 Hanoi Beer will offset losses from the drop in Hanoi Beer'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 |
| Hanoi Beer vs. Tien Phong Plastic | Hanoi Beer vs. An Phat Holdings | Hanoi Beer vs. FPT Corp | Hanoi Beer vs. POST TELECOMMU |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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