Correlation Between Pha Le and Transport
Can any of the company-specific risk be diversified away by investing in both Pha Le and Transport 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 Transport 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 Transport and Industry, you can compare the effects of market volatilities on Pha Le and Transport 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 Transport. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Transport.
Diversification Opportunities for Pha Le and Transport
Poor diversification
The 3 months correlation between Pha and Transport is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Transport and Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Industry 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport and Industry has no effect on the direction of Pha Le i.e., Pha Le and Transport go up and down completely randomly.
Pair Corralation between Pha Le and Transport
Assuming the 90 days trading horizon Pha Le Plastics is expected to generate 1.28 times more return on investment than Transport. However, Pha Le is 1.28 times more volatile than Transport and Industry. It trades about 0.1 of its potential returns per unit of risk. Transport and Industry is currently generating about -0.14 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. Transport and Industry
Performance |
| Timeline |
| Pha Le Plastics |
| Transport and Industry |
Pha Le and Transport Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Le and Transport
The main advantage of trading using opposite Pha Le and Transport positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Le position performs unexpectedly, Transport 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 Transport will offset losses from the drop in Transport's long position.The idea behind Pha Le Plastics and Transport and Industry 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.| Transport vs. Dinhvu Port Investment | Transport vs. HVC Investment and | Transport vs. PetroVietnam Drilling Well | Transport vs. Hochiminh City Metal |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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