Correlation Between Long An and Phuoc Hoa
Can any of the company-specific risk be diversified away by investing in both Long An and Phuoc Hoa 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 Phuoc Hoa 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 Phuoc Hoa Rubber, you can compare the effects of market volatilities on Long An and Phuoc Hoa 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 Phuoc Hoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long An and Phuoc Hoa.
Diversification Opportunities for Long An and Phuoc Hoa
Excellent diversification
The 3 months correlation between Long and Phuoc is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Long An Food and Phuoc Hoa Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phuoc Hoa Rubber 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 Phuoc Hoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phuoc Hoa Rubber has no effect on the direction of Long An i.e., Long An and Phuoc Hoa go up and down completely randomly.
Pair Corralation between Long An and Phuoc Hoa
Assuming the 90 days trading horizon Long An Food is expected to under-perform the Phuoc Hoa. But the stock apears to be less risky and, when comparing its historical volatility, Long An Food is 1.15 times less risky than Phuoc Hoa. The stock trades about -0.21 of its potential returns per unit of risk. The Phuoc Hoa Rubber is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 5,680,000 in Phuoc Hoa Rubber on September 14, 2024 and sell it today you would earn a total of 200,000 from holding Phuoc Hoa Rubber or generate 3.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Long An Food vs. Phuoc Hoa Rubber
Performance |
| Timeline |
| Long An Food |
| Phuoc Hoa Rubber |
Long An and Phuoc Hoa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long An and Phuoc Hoa
The main advantage of trading using opposite Long An and Phuoc Hoa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long An position performs unexpectedly, Phuoc Hoa 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 Phuoc Hoa will offset losses from the drop in Phuoc Hoa's long position.| Long An vs. Ha Long Investment | Long An vs. Din Capital Investment | Long An vs. Danang Education Investment | Long An vs. Tng Investment And |
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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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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