Correlation Between Long Giang and Tien Phong
Can any of the company-specific risk be diversified away by investing in both Long Giang and Tien Phong 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 Giang and Tien Phong into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Long Giang Investment and Tien Phong Plastic, you can compare the effects of market volatilities on Long Giang and Tien Phong 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 Giang with a short position of Tien Phong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Long Giang and Tien Phong.
Diversification Opportunities for Long Giang and Tien Phong
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Long and Tien is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Long Giang Investment and Tien Phong Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tien Phong Plastic and Long Giang 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 Giang Investment are associated (or correlated) with Tien Phong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tien Phong Plastic has no effect on the direction of Long Giang i.e., Long Giang and Tien Phong go up and down completely randomly.
Pair Corralation between Long Giang and Tien Phong
Assuming the 90 days trading horizon Long Giang Investment is expected to under-perform the Tien Phong. But the stock apears to be less risky and, when comparing its historical volatility, Long Giang Investment is 1.34 times less risky than Tien Phong. The stock trades about -0.06 of its potential returns per unit of risk. The Tien Phong Plastic is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 6,050,000 in Tien Phong Plastic on November 6, 2024 and sell it today you would earn a total of 50,000 from holding Tien Phong Plastic or generate 0.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Long Giang Investment vs. Tien Phong Plastic
Performance |
| Timeline |
| Long Giang Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Tien Phong Plastic |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Modest
Long Giang and Tien Phong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Long Giang and Tien Phong
The main advantage of trading using opposite Long Giang and Tien Phong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Long Giang position performs unexpectedly, Tien Phong 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 Tien Phong will offset losses from the drop in Tien Phong's long position.The idea behind Long Giang Investment and Tien Phong Plastic 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Companies Directory Evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Fundamental Analysis View fundamental data based on most recent published financial statements | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators |