Correlation Between Nafoods Group and Binh Minh
Can any of the company-specific risk be diversified away by investing in both Nafoods Group and Binh Minh 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 Nafoods Group and Binh Minh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nafoods Group JSC and Binh Minh Plastics, you can compare the effects of market volatilities on Nafoods Group and Binh Minh 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 Nafoods Group with a short position of Binh Minh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nafoods Group and Binh Minh.
Diversification Opportunities for Nafoods Group and Binh Minh
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nafoods and Binh is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Nafoods Group JSC and Binh Minh Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Minh Plastics and Nafoods Group 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 Nafoods Group JSC are associated (or correlated) with Binh Minh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Minh Plastics has no effect on the direction of Nafoods Group i.e., Nafoods Group and Binh Minh go up and down completely randomly.
Pair Corralation between Nafoods Group and Binh Minh
Assuming the 90 days trading horizon Nafoods Group JSC is expected to generate 0.35 times more return on investment than Binh Minh. However, Nafoods Group JSC is 2.86 times less risky than Binh Minh. It trades about 0.33 of its potential returns per unit of risk. Binh Minh Plastics is currently generating about -0.16 per unit of risk. If you would invest 1,915,000 in Nafoods Group JSC on November 7, 2024 and sell it today you would earn a total of 70,000 from holding Nafoods Group JSC or generate 3.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nafoods Group JSC vs. Binh Minh Plastics
Performance |
| Timeline |
| Nafoods Group JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Binh Minh Plastics |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Nafoods Group and Binh Minh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nafoods Group and Binh Minh
The main advantage of trading using opposite Nafoods Group and Binh Minh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nafoods Group position performs unexpectedly, Binh Minh 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 Binh Minh will offset losses from the drop in Binh Minh's long position.The idea behind Nafoods Group JSC and Binh Minh Plastics 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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