Correlation Between Pha Lai and Damsan JSC
Can any of the company-specific risk be diversified away by investing in both Pha Lai and Damsan JSC 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 Lai and Damsan JSC into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Pha Lai Thermal and Damsan JSC, you can compare the effects of market volatilities on Pha Lai and Damsan JSC 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 Lai with a short position of Damsan JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and Damsan JSC.
Diversification Opportunities for Pha Lai and Damsan JSC
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pha and Damsan is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Damsan JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damsan JSC and Pha Lai 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 Lai Thermal are associated (or correlated) with Damsan JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damsan JSC has no effect on the direction of Pha Lai i.e., Pha Lai and Damsan JSC go up and down completely randomly.
Pair Corralation between Pha Lai and Damsan JSC
Assuming the 90 days trading horizon Pha Lai is expected to generate 2.55 times less return on investment than Damsan JSC. But when comparing it to its historical volatility, Pha Lai Thermal is 1.53 times less risky than Damsan JSC. It trades about 0.01 of its potential returns per unit of risk. Damsan JSC is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 943,839 in Damsan JSC on November 27, 2024 and sell it today you would earn a total of 23,161 from holding Damsan JSC or generate 2.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Lai Thermal vs. Damsan JSC
Performance |
| Timeline |
| Pha Lai Thermal |
| Damsan JSC |
Pha Lai and Damsan JSC Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Lai and Damsan JSC
The main advantage of trading using opposite Pha Lai and Damsan JSC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, Damsan JSC 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 Damsan JSC will offset losses from the drop in Damsan JSC's long position.| Pha Lai vs. Riverway Management JSC | Pha Lai vs. Duong Hieu Trading | Pha Lai vs. HVC Investment and | Pha Lai vs. CEO Group JSC |
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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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