Correlation Between Phuoc Hoa and Transimex Transportation
Can any of the company-specific risk be diversified away by investing in both Phuoc Hoa and Transimex Transportation 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 Transimex Transportation 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 Transimex Transportation JSC, you can compare the effects of market volatilities on Phuoc Hoa and Transimex Transportation 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 Transimex Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Phuoc Hoa and Transimex Transportation.
Diversification Opportunities for Phuoc Hoa and Transimex Transportation
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Phuoc and Transimex is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Phuoc Hoa Rubber and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation 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 Transimex Transportation. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transimex Transportation has no effect on the direction of Phuoc Hoa i.e., Phuoc Hoa and Transimex Transportation go up and down completely randomly.
Pair Corralation between Phuoc Hoa and Transimex Transportation
Assuming the 90 days trading horizon Phuoc Hoa is expected to generate 1.99 times less return on investment than Transimex Transportation. But when comparing it to its historical volatility, Phuoc Hoa Rubber is 1.43 times less risky than Transimex Transportation. It trades about 0.05 of its potential returns per unit of risk. Transimex Transportation JSC is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,157,876 in Transimex Transportation JSC on August 31, 2024 and sell it today you would earn a total of 552,124 from holding Transimex Transportation JSC or generate 47.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 82.04% |
| Values | Daily Returns |
Phuoc Hoa Rubber vs. Transimex Transportation JSC
Performance |
| Timeline |
| Phuoc Hoa Rubber |
| Transimex Transportation |
Phuoc Hoa and Transimex Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Phuoc Hoa and Transimex Transportation
The main advantage of trading using opposite Phuoc Hoa and Transimex Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Phuoc Hoa position performs unexpectedly, Transimex Transportation 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 Transimex Transportation will offset losses from the drop in Transimex Transportation'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 |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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