Correlation Between Construction and Thanh Dat
Can any of the company-specific risk be diversified away by investing in both Construction and Thanh Dat 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 Construction and Thanh Dat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Construction And Investment and Thanh Dat Investment, you can compare the effects of market volatilities on Construction and Thanh Dat 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 Construction with a short position of Thanh Dat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction and Thanh Dat.
Diversification Opportunities for Construction and Thanh Dat
0.41 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Construction and Thanh is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Construction And Investment and Thanh Dat Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Dat Investment and Construction 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 Construction And Investment are associated (or correlated) with Thanh Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Dat Investment has no effect on the direction of Construction i.e., Construction and Thanh Dat go up and down completely randomly.
Pair Corralation between Construction and Thanh Dat
Assuming the 90 days trading horizon Construction And Investment is expected to generate 0.72 times more return on investment than Thanh Dat. However, Construction And Investment is 1.39 times less risky than Thanh Dat. It trades about 0.17 of its potential returns per unit of risk. Thanh Dat Investment is currently generating about 0.08 per unit of risk. If you would invest 3,660,000 in Construction And Investment on August 30, 2024 and sell it today you would earn a total of 260,000 from holding Construction And Investment or generate 7.1% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Construction And Investment vs. Thanh Dat Investment
Performance |
| Timeline |
| Construction And Inv |
| Thanh Dat Investment |
Construction and Thanh Dat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Construction and Thanh Dat
The main advantage of trading using opposite Construction and Thanh Dat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction position performs unexpectedly, Thanh Dat 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 Thanh Dat will offset losses from the drop in Thanh Dat's long position.| Construction vs. Song Hong Construction | Construction vs. 577 Investment Corp | Construction vs. Danang Education Investment | Construction vs. Vu Dang Investment |
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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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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