Correlation Between Tien Phong and Hochiminh City
Can any of the company-specific risk be diversified away by investing in both Tien Phong and Hochiminh City 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 Tien Phong and Hochiminh City into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tien Phong Plastic and Hochiminh City Metal, you can compare the effects of market volatilities on Tien Phong and Hochiminh City 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 Tien Phong with a short position of Hochiminh City. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tien Phong and Hochiminh City.
Diversification Opportunities for Tien Phong and Hochiminh City
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Tien and Hochiminh is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Tien Phong Plastic and Hochiminh City Metal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hochiminh City Metal and Tien Phong 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 Tien Phong Plastic are associated (or correlated) with Hochiminh City. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hochiminh City Metal has no effect on the direction of Tien Phong i.e., Tien Phong and Hochiminh City go up and down completely randomly.
Pair Corralation between Tien Phong and Hochiminh City
Assuming the 90 days trading horizon Tien Phong Plastic is expected to generate 1.7 times more return on investment than Hochiminh City. However, Tien Phong is 1.7 times more volatile than Hochiminh City Metal. It trades about 0.1 of its potential returns per unit of risk. Hochiminh City Metal is currently generating about 0.05 per unit of risk. If you would invest 3,333,339 in Tien Phong Plastic on September 2, 2024 and sell it today you would earn a total of 2,686,661 from holding Tien Phong Plastic or generate 80.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.59% |
| Values | Daily Returns |
Tien Phong Plastic vs. Hochiminh City Metal
Performance |
| Timeline |
| Tien Phong Plastic |
| Hochiminh City Metal |
Tien Phong and Hochiminh City Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tien Phong and Hochiminh City
The main advantage of trading using opposite Tien Phong and Hochiminh City positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tien Phong position performs unexpectedly, Hochiminh City 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 Hochiminh City will offset losses from the drop in Hochiminh City's long position.| Tien Phong vs. FIT INVEST JSC | Tien Phong vs. Damsan JSC | Tien Phong vs. An Phat Plastic | Tien Phong vs. Alphanam ME |
| Hochiminh City vs. FIT INVEST JSC | Hochiminh City vs. Damsan JSC | Hochiminh City vs. An Phat Plastic | Hochiminh City vs. Alphanam ME |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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