Correlation Between Long An and Investment
Can any of the company-specific risk be diversified away by investing in both Long An and Investment 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 Long An and Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long An Food and Investment and Industrial, you can compare the effects of market volatilities on Long An and Investment 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 Long An with a short position of Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long An and Investment.
Diversification Opportunities for Long An and Investment
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Long and Investment is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding Long An Food and Investment and Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Investment and Industrial and Long An 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 Long An Food are associated (or correlated) with Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Investment and Industrial has no effect on the direction of Long An i.e., Long An and Investment go up and down completely randomly.
Pair Corralation between Long An and Investment
Assuming the 90 days trading horizon Long An Food is expected to under-perform the Investment. But the stock apears to be less risky and, when comparing its historical volatility, Long An Food is 1.77 times less risky than Investment. The stock trades about -0.15 of its potential returns per unit of risk. The Investment and Industrial is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 6,750,000 in Investment and Industrial on September 12, 2024 and sell it today you would earn a total of 50,000 from holding Investment and Industrial or generate 0.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Long An Food vs. Investment and Industrial
Performance |
| Timeline |
| Long An Food |
| Investment and Industrial |
Long An and Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long An and Investment
The main advantage of trading using opposite Long An and Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long An position performs unexpectedly, Investment 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 Investment will offset losses from the drop in Investment's long position.The idea behind Long An Food and Investment and Industrial 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.| Investment vs. BIDV Insurance Corp | Investment vs. Vnsteel Vicasa JSC | Investment vs. Vina2 Investment and | Investment vs. HUD1 Investment and |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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