Correlation Between Pha Le and BIDV Insurance
Can any of the company-specific risk be diversified away by investing in both Pha Le and BIDV Insurance 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 Pha Le and BIDV Insurance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pha Le Plastics and BIDV Insurance Corp, you can compare the effects of market volatilities on Pha Le and BIDV Insurance 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 Pha Le with a short position of BIDV Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and BIDV Insurance.
Diversification Opportunities for Pha Le and BIDV Insurance
-0.37 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Pha and BIDV is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and BIDV Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIDV Insurance Corp and Pha Le 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 Pha Le Plastics are associated (or correlated) with BIDV Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIDV Insurance Corp has no effect on the direction of Pha Le i.e., Pha Le and BIDV Insurance go up and down completely randomly.
Pair Corralation between Pha Le and BIDV Insurance
Assuming the 90 days trading horizon Pha Le Plastics is expected to generate 2.29 times more return on investment than BIDV Insurance. However, Pha Le is 2.29 times more volatile than BIDV Insurance Corp. It trades about 0.21 of its potential returns per unit of risk. BIDV Insurance Corp is currently generating about -0.11 per unit of risk. If you would invest 461,000 in Pha Le Plastics on October 7, 2024 and sell it today you would earn a total of 39,000 from holding Pha Le Plastics or generate 8.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Le Plastics vs. BIDV Insurance Corp
Performance |
| Timeline |
| Pha Le Plastics |
| BIDV Insurance Corp |
Pha Le and BIDV Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Le and BIDV Insurance
The main advantage of trading using opposite Pha Le and BIDV Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Le position performs unexpectedly, BIDV Insurance 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 BIDV Insurance will offset losses from the drop in BIDV Insurance's long position.| Pha Le vs. Construction JSC No5 | Pha Le vs. Development Investment Construction | Pha Le vs. Viettel Construction JSC | Pha Le vs. Military Insurance Corp |
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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