Correlation Between Hoa Phat and Bao Ngoc
Can any of the company-specific risk be diversified away by investing in both Hoa Phat and Bao Ngoc 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 Hoa Phat and Bao Ngoc into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hoa Phat Group and Bao Ngoc Investment, you can compare the effects of market volatilities on Hoa Phat and Bao Ngoc 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 Hoa Phat with a short position of Bao Ngoc. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hoa Phat and Bao Ngoc.
Diversification Opportunities for Hoa Phat and Bao Ngoc
Good diversification
The 3 months correlation between Hoa and Bao is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding Hoa Phat Group and Bao Ngoc Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bao Ngoc Investment and Hoa Phat 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 Hoa Phat Group are associated (or correlated) with Bao Ngoc. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bao Ngoc Investment has no effect on the direction of Hoa Phat i.e., Hoa Phat and Bao Ngoc go up and down completely randomly.
Pair Corralation between Hoa Phat and Bao Ngoc
Assuming the 90 days trading horizon Hoa Phat Group is expected to generate 0.59 times more return on investment than Bao Ngoc. However, Hoa Phat Group is 1.68 times less risky than Bao Ngoc. It trades about 0.14 of its potential returns per unit of risk. Bao Ngoc Investment is currently generating about -0.02 per unit of risk. If you would invest 2,510,000 in Hoa Phat Group on September 12, 2024 and sell it today you would earn a total of 265,000 from holding Hoa Phat Group or generate 10.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hoa Phat Group vs. Bao Ngoc Investment
Performance |
| Timeline |
| Hoa Phat Group |
| Bao Ngoc Investment |
Hoa Phat and Bao Ngoc Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hoa Phat and Bao Ngoc
The main advantage of trading using opposite Hoa Phat and Bao Ngoc positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hoa Phat position performs unexpectedly, Bao Ngoc 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 Bao Ngoc will offset losses from the drop in Bao Ngoc's long position.| Hoa Phat vs. FIT INVEST JSC | Hoa Phat vs. Damsan JSC | Hoa Phat vs. An Phat Plastic | Hoa Phat vs. Alphanam ME |
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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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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