Correlation Between HNX and Da Nang
Can any of the company-specific risk be diversified away by investing in both HNX and Da Nang 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 HNX and Da Nang into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between HNX and Da Nang Construction, you can compare the effects of market volatilities on HNX and Da Nang 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 HNX with a short position of Da Nang. Check out your portfolio center. Please also check ongoing floating volatility patterns of HNX and Da Nang.
Diversification Opportunities for HNX and Da Nang
Very good diversification
The 3 months correlation between HNX and DXV is -0.31. Overlapping area represents the amount of risk that can be diversified away by holding HNX and Da Nang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Nang Construction and HNX 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 HNX are associated (or correlated) with Da Nang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Nang Construction has no effect on the direction of HNX i.e., HNX and Da Nang go up and down completely randomly.
Pair Corralation between HNX and Da Nang
Assuming the 90 days trading horizon HNX is expected to generate 27.53 times less return on investment than Da Nang. But when comparing it to its historical volatility, HNX is 7.8 times less risky than Da Nang. It trades about 0.03 of its potential returns per unit of risk. Da Nang Construction is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 350,000 in Da Nang Construction on September 3, 2024 and sell it today you would earn a total of 35,000 from holding Da Nang Construction or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
HNX vs. Da Nang Construction
Performance |
| Timeline |
HNX and Da Nang Volatility Contrast
Predicted Return Density |
| Returns |
HNX
Pair trading matchups for HNX
Da Nang Construction
Pair trading matchups for Da Nang
Pair Trading with HNX and Da Nang
The main advantage of trading using opposite HNX and Da Nang positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if HNX position performs unexpectedly, Da Nang 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 Da Nang will offset losses from the drop in Da Nang's long position.The idea behind HNX and Da Nang Construction pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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