Correlation Between Phuoc Hoa and Vietnam JSCmmercial
Can any of the company-specific risk be diversified away by investing in both Phuoc Hoa and Vietnam JSCmmercial 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 Phuoc Hoa and Vietnam JSCmmercial into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Phuoc Hoa Rubber and Vietnam JSCmmercial Bank, you can compare the effects of market volatilities on Phuoc Hoa and Vietnam JSCmmercial 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 Phuoc Hoa with a short position of Vietnam JSCmmercial. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phuoc Hoa and Vietnam JSCmmercial.
Diversification Opportunities for Phuoc Hoa and Vietnam JSCmmercial
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Phuoc and Vietnam is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Phuoc Hoa Rubber and Vietnam JSCmmercial Bank in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vietnam JSCmmercial Bank and Phuoc Hoa 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 Phuoc Hoa Rubber are associated (or correlated) with Vietnam JSCmmercial. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vietnam JSCmmercial Bank has no effect on the direction of Phuoc Hoa i.e., Phuoc Hoa and Vietnam JSCmmercial go up and down completely randomly.
Pair Corralation between Phuoc Hoa and Vietnam JSCmmercial
Assuming the 90 days trading horizon Phuoc Hoa is expected to generate 1.09 times less return on investment than Vietnam JSCmmercial. But when comparing it to its historical volatility, Phuoc Hoa Rubber is 1.22 times less risky than Vietnam JSCmmercial. It trades about 0.16 of its potential returns per unit of risk. Vietnam JSCmmercial Bank is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,495,000 in Vietnam JSCmmercial Bank on September 12, 2024 and sell it today you would earn a total of 140,000 from holding Vietnam JSCmmercial Bank or generate 4.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Phuoc Hoa Rubber vs. Vietnam JSCmmercial Bank
Performance |
| Timeline |
| Phuoc Hoa Rubber |
| Vietnam JSCmmercial Bank |
Phuoc Hoa and Vietnam JSCmmercial Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phuoc Hoa and Vietnam JSCmmercial
The main advantage of trading using opposite Phuoc Hoa and Vietnam JSCmmercial positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phuoc Hoa position performs unexpectedly, Vietnam JSCmmercial 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 Vietnam JSCmmercial will offset losses from the drop in Vietnam JSCmmercial's long position.| Phuoc Hoa vs. FIT INVEST JSC | Phuoc Hoa vs. Damsan JSC | Phuoc Hoa vs. An Phat Plastic | Phuoc Hoa vs. Alphanam ME |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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