Correlation Between Pha Le and Hanoi Plastics
Can any of the company-specific risk be diversified away by investing in both Pha Le and Hanoi Plastics 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 Hanoi Plastics 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 Hanoi Plastics JSC, you can compare the effects of market volatilities on Pha Le and Hanoi Plastics 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 Hanoi Plastics. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Hanoi Plastics.
Diversification Opportunities for Pha Le and Hanoi Plastics
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pha and Hanoi is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Hanoi Plastics JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Plastics JSC 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 Hanoi Plastics. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Plastics JSC has no effect on the direction of Pha Le i.e., Pha Le and Hanoi Plastics go up and down completely randomly.
Pair Corralation between Pha Le and Hanoi Plastics
Assuming the 90 days trading horizon Pha Le Plastics is expected to generate 1.8 times more return on investment than Hanoi Plastics. However, Pha Le is 1.8 times more volatile than Hanoi Plastics JSC. It trades about 0.1 of its potential returns per unit of risk. Hanoi Plastics JSC is currently generating about -0.09 per unit of risk. If you would invest 447,000 in Pha Le Plastics on September 12, 2024 and sell it today you would earn a total of 21,000 from holding Pha Le Plastics or generate 4.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Le Plastics vs. Hanoi Plastics JSC
Performance |
| Timeline |
| Pha Le Plastics |
| Hanoi Plastics JSC |
Pha Le and Hanoi Plastics Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Le and Hanoi Plastics
The main advantage of trading using opposite Pha Le and Hanoi Plastics positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Le position performs unexpectedly, Hanoi Plastics 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 Hanoi Plastics will offset losses from the drop in Hanoi Plastics' long position.The idea behind Pha Le Plastics and Hanoi Plastics JSC 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.| Hanoi Plastics vs. FIT INVEST JSC | Hanoi Plastics vs. Damsan JSC | Hanoi Plastics vs. An Phat Plastic | Hanoi Plastics 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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