Correlation Between Pha Le and Hung Hau
Can any of the company-specific risk be diversified away by investing in both Pha Le and Hung Hau 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 Hung Hau 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 Hung Hau Agricultural, you can compare the effects of market volatilities on Pha Le and Hung Hau 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 Hung Hau. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Hung Hau.
Diversification Opportunities for Pha Le and Hung Hau
Poor diversification
The 3 months correlation between Pha and Hung is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Hung Hau Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hung Hau Agricultural 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 Hung Hau. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hung Hau Agricultural has no effect on the direction of Pha Le i.e., Pha Le and Hung Hau go up and down completely randomly.
Pair Corralation between Pha Le and Hung Hau
Assuming the 90 days trading horizon Pha Le Plastics is expected to under-perform the Hung Hau. But the stock apears to be less risky and, when comparing its historical volatility, Pha Le Plastics is 3.24 times less risky than Hung Hau. The stock trades about -0.06 of its potential returns per unit of risk. The Hung Hau Agricultural is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 1,105,426 in Hung Hau Agricultural on September 2, 2024 and sell it today you would lose (55,426) from holding Hung Hau Agricultural or give up 5.01% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 67.72% |
| Values | Daily Returns |
Pha Le Plastics vs. Hung Hau Agricultural
Performance |
| Timeline |
| Pha Le Plastics |
| Hung Hau Agricultural |
Pha Le and Hung Hau Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Le and Hung Hau
The main advantage of trading using opposite Pha Le and Hung Hau positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Le position performs unexpectedly, Hung Hau 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 Hung Hau will offset losses from the drop in Hung Hau's long position.The idea behind Pha Le Plastics and Hung Hau Agricultural 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.| Hung Hau vs. Song Hong Garment | Hung Hau vs. Alphanam ME | Hung Hau vs. Hochiminh City Metal | Hung Hau vs. Atesco Industrial Cartering |
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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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