Correlation Between Pha Le and Tay Ninh
Can any of the company-specific risk be diversified away by investing in both Pha Le and Tay Ninh 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 Tay Ninh 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 Tay Ninh Rubber, you can compare the effects of market volatilities on Pha Le and Tay Ninh 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 Tay Ninh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Le and Tay Ninh.
Diversification Opportunities for Pha Le and Tay Ninh
Very weak diversification
The 3 months correlation between Pha and Tay is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Pha Le Plastics and Tay Ninh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tay Ninh Rubber 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 Tay Ninh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tay Ninh Rubber has no effect on the direction of Pha Le i.e., Pha Le and Tay Ninh go up and down completely randomly.
Pair Corralation between Pha Le and Tay Ninh
Assuming the 90 days trading horizon Pha Le is expected to generate 6.85 times less return on investment than Tay Ninh. But when comparing it to its historical volatility, Pha Le Plastics is 1.06 times less risky than Tay Ninh. It trades about 0.02 of its potential returns per unit of risk. Tay Ninh Rubber is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,903,175 in Tay Ninh Rubber on October 30, 2024 and sell it today you would earn a total of 4,126,825 from holding Tay Ninh Rubber or generate 142.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.11% |
| Values | Daily Returns |
Pha Le Plastics vs. Tay Ninh Rubber
Performance |
| Timeline |
| Pha Le Plastics |
| Tay Ninh Rubber |
Pha Le and Tay Ninh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Le and Tay Ninh
The main advantage of trading using opposite Pha Le and Tay Ninh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Le position performs unexpectedly, Tay Ninh 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 Tay Ninh will offset losses from the drop in Tay Ninh's long position.| Pha Le vs. Japan Vietnam Medical | Pha Le vs. Hanoi Plastics JSC | Pha Le vs. An Phat Plastic | Pha Le vs. Tien Phong Plastic |
| Tay Ninh vs. Truong Thanh Furniture | Tay Ninh vs. Nam Kim Steel | Tay Ninh vs. Vinhomes JSC | Tay Ninh vs. Post and Telecommunications |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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