Correlation Between Pha Le and Transimex Transportation
Can any of the company-specific risk be diversified away by investing in both Pha Le 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 Pha Le and Transimex Transportation 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 Transimex Transportation JSC, you can compare the effects of market volatilities on Pha Le 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 Pha Le with a short position of Transimex Transportation. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Transimex Transportation.
Diversification Opportunities for Pha Le and Transimex Transportation
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pha and Transimex is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Transimex Transportation JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transimex Transportation 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 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 Pha Le i.e., Pha Le and Transimex Transportation go up and down completely randomly.
Pair Corralation between Pha Le and Transimex Transportation
Assuming the 90 days trading horizon Pha Le Plastics is expected to generate 1.8 times more return on investment than Transimex Transportation. However, Pha Le is 1.8 times more volatile than Transimex Transportation JSC. It trades about 0.1 of its potential returns per unit of risk. Transimex Transportation JSC is currently generating about -0.16 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 | 69.57% |
| Values | Daily Returns |
Pha Le Plastics vs. Transimex Transportation JSC
Performance |
| Timeline |
| Pha Le Plastics |
| Transimex Transportation |
Pha Le and Transimex Transportation Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Le and Transimex Transportation
The main advantage of trading using opposite Pha Le and Transimex Transportation positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Le 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.The idea behind Pha Le Plastics and Transimex Transportation 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.| Transimex Transportation vs. Song Hong Garment | Transimex Transportation vs. Alphanam ME | Transimex Transportation vs. Hochiminh City Metal | Transimex Transportation 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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