Correlation Between Japan Vietnam and Hai An
Can any of the company-specific risk be diversified away by investing in both Japan Vietnam and Hai An 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 Japan Vietnam and Hai An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Japan Vietnam Medical and Hai An Transport, you can compare the effects of market volatilities on Japan Vietnam and Hai An 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 Japan Vietnam with a short position of Hai An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Japan Vietnam and Hai An.
Diversification Opportunities for Japan Vietnam and Hai An
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Japan and Hai is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Japan Vietnam Medical and Hai An Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hai An Transport and Japan Vietnam 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 Japan Vietnam Medical are associated (or correlated) with Hai An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hai An Transport has no effect on the direction of Japan Vietnam i.e., Japan Vietnam and Hai An go up and down completely randomly.
Pair Corralation between Japan Vietnam and Hai An
Assuming the 90 days trading horizon Japan Vietnam Medical is expected to generate 1.42 times more return on investment than Hai An. However, Japan Vietnam is 1.42 times more volatile than Hai An Transport. It trades about 0.21 of its potential returns per unit of risk. Hai An Transport is currently generating about 0.23 per unit of risk. If you would invest 384,000 in Japan Vietnam Medical on November 7, 2024 and sell it today you would earn a total of 32,000 from holding Japan Vietnam Medical or generate 8.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Japan Vietnam Medical vs. Hai An Transport
Performance |
| Timeline |
| Japan Vietnam Medical |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Good
| Hai An Transport |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Japan Vietnam and Hai An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Japan Vietnam and Hai An
The main advantage of trading using opposite Japan Vietnam and Hai An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Japan Vietnam position performs unexpectedly, Hai An 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 Hai An will offset losses from the drop in Hai An's long position.The idea behind Japan Vietnam Medical and Hai An Transport 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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