Correlation Between Hochiminh City and Tien Phong
Can any of the company-specific risk be diversified away by investing in both Hochiminh City and Tien Phong 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 Tien Phong 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 Tien Phong Plastic, you can compare the effects of market volatilities on Hochiminh City and Tien Phong 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 Tien Phong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hochiminh City and Tien Phong.
Diversification Opportunities for Hochiminh City and Tien Phong
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Hochiminh and Tien is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Hochiminh City Metal and Tien Phong Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tien Phong 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 Tien Phong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tien Phong Plastic has no effect on the direction of Hochiminh City i.e., Hochiminh City and Tien Phong go up and down completely randomly.
Pair Corralation between Hochiminh City and Tien Phong
Assuming the 90 days trading horizon Hochiminh City is expected to generate 3.24 times less return on investment than Tien Phong. But when comparing it to its historical volatility, Hochiminh City Metal is 1.7 times less risky than Tien Phong. It trades about 0.05 of its potential returns per unit of risk. Tien Phong Plastic is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,333,339 in Tien Phong Plastic on September 2, 2024 and sell it today you would earn a total of 2,686,661 from holding Tien Phong Plastic or generate 80.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Hochiminh City Metal vs. Tien Phong Plastic
Performance |
| Timeline |
| Hochiminh City Metal |
| Tien Phong Plastic |
Hochiminh City and Tien Phong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hochiminh City and Tien Phong
The main advantage of trading using opposite Hochiminh City and Tien Phong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hochiminh City position performs unexpectedly, Tien Phong 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 Tien Phong will offset losses from the drop in Tien Phong'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 |
| Tien Phong vs. FIT INVEST JSC | Tien Phong vs. Damsan JSC | Tien Phong vs. An Phat Plastic | Tien Phong 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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