Correlation Between Pha Lai and BIDV Insurance
Can any of the company-specific risk be diversified away by investing in both Pha Lai and BIDV Insurance 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 BIDV Insurance 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 BIDV Insurance Corp, you can compare the effects of market volatilities on Pha Lai and BIDV Insurance 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 BIDV Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and BIDV Insurance.
Diversification Opportunities for Pha Lai and BIDV Insurance
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Pha and BIDV is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and BIDV Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIDV Insurance Corp 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 BIDV Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIDV Insurance Corp has no effect on the direction of Pha Lai i.e., Pha Lai and BIDV Insurance go up and down completely randomly.
Pair Corralation between Pha Lai and BIDV Insurance
Assuming the 90 days trading horizon Pha Lai Thermal is expected to generate 0.94 times more return on investment than BIDV Insurance. However, Pha Lai Thermal is 1.07 times less risky than BIDV Insurance. It trades about -0.14 of its potential returns per unit of risk. BIDV Insurance Corp is currently generating about -0.27 per unit of risk. If you would invest 1,145,000 in Pha Lai Thermal on January 9, 2025 and sell it today you would lose (70,000) from holding Pha Lai Thermal or give up 6.11% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Lai Thermal vs. BIDV Insurance Corp
Performance |
| Timeline |
| Pha Lai Thermal |
| BIDV Insurance Corp |
Pha Lai and BIDV Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Lai and BIDV Insurance
The main advantage of trading using opposite Pha Lai and BIDV Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, BIDV Insurance 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 BIDV Insurance will offset losses from the drop in BIDV Insurance's long position.The idea behind Pha Lai Thermal and BIDV Insurance Corp 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.| BIDV Insurance vs. FIT INVEST JSC | BIDV Insurance vs. Damsan JSC | BIDV Insurance vs. An Phat Plastic | BIDV Insurance vs. Alphanam ME |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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