Correlation Between Pha Lai and FPT Digital
Can any of the company-specific risk be diversified away by investing in both Pha Lai and FPT Digital 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 FPT Digital 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 FPT Digital Retail, you can compare the effects of market volatilities on Pha Lai and FPT Digital 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 FPT Digital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and FPT Digital.
Diversification Opportunities for Pha Lai and FPT Digital
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Pha and FPT is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and FPT Digital Retail in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Digital Retail 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 FPT Digital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Digital Retail has no effect on the direction of Pha Lai i.e., Pha Lai and FPT Digital go up and down completely randomly.
Pair Corralation between Pha Lai and FPT Digital
Assuming the 90 days trading horizon Pha Lai is expected to generate 8.91 times less return on investment than FPT Digital. But when comparing it to its historical volatility, Pha Lai Thermal is 1.17 times less risky than FPT Digital. It trades about 0.02 of its potential returns per unit of risk. FPT Digital Retail is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 6,329,338 in FPT Digital Retail on September 2, 2024 and sell it today you would earn a total of 11,520,662 from holding FPT Digital Retail or generate 182.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Pha Lai Thermal vs. FPT Digital Retail
Performance |
| Timeline |
| Pha Lai Thermal |
| FPT Digital Retail |
Pha Lai and FPT Digital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Lai and FPT Digital
The main advantage of trading using opposite Pha Lai and FPT Digital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, FPT Digital 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 FPT Digital will offset losses from the drop in FPT Digital's long position.The idea behind Pha Lai Thermal and FPT Digital Retail 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.| FPT Digital vs. FIT INVEST JSC | FPT Digital vs. Damsan JSC | FPT Digital vs. An Phat Plastic | FPT Digital 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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