Correlation Between Pha Lai and Tien Phong
Can any of the company-specific risk be diversified away by investing in both Pha Lai and Tien Phong 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 Tien Phong 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 Tien Phong Plastic, you can compare the effects of market volatilities on Pha Lai and Tien Phong 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 Tien Phong. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and Tien Phong.
Diversification Opportunities for Pha Lai and Tien Phong
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Pha and Tien is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Tien Phong Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tien Phong Plastic 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 Tien Phong. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tien Phong Plastic has no effect on the direction of Pha Lai i.e., Pha Lai and Tien Phong go up and down completely randomly.
Pair Corralation between Pha Lai and Tien Phong
Assuming the 90 days trading horizon Pha Lai Thermal is expected to under-perform the Tien Phong. But the stock apears to be less risky and, when comparing its historical volatility, Pha Lai Thermal is 1.65 times less risky than Tien Phong. The stock trades about -0.01 of its potential returns per unit of risk. The Tien Phong Plastic is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 3,333,339 in Tien Phong Plastic on September 2, 2024 and sell it today you would earn a total of 2,686,661 from holding Tien Phong Plastic or generate 80.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.59% |
| Values | Daily Returns |
Pha Lai Thermal vs. Tien Phong Plastic
Performance |
| Timeline |
| Pha Lai Thermal |
| Tien Phong Plastic |
Pha Lai and Tien Phong Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Lai and Tien Phong
The main advantage of trading using opposite Pha Lai and Tien Phong positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, Tien Phong 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 Tien Phong will offset losses from the drop in Tien Phong's long position.The idea behind Pha Lai Thermal and Tien Phong Plastic 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.| Tien Phong vs. FIT INVEST JSC | Tien Phong vs. Damsan JSC | Tien Phong vs. An Phat Plastic | Tien Phong 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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