Correlation Between Pha Lai and Van Dien
Can any of the company-specific risk be diversified away by investing in both Pha Lai and Van Dien 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 Van Dien 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 Van Dien Fused, you can compare the effects of market volatilities on Pha Lai and Van Dien 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 Van Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Pha Lai and Van Dien.
Diversification Opportunities for Pha Lai and Van Dien
Excellent diversification
The 3 months correlation between Pha and Van is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding Pha Lai Thermal and Van Dien Fused in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Van Dien Fused 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 Van Dien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Van Dien Fused has no effect on the direction of Pha Lai i.e., Pha Lai and Van Dien go up and down completely randomly.
Pair Corralation between Pha Lai and Van Dien
Assuming the 90 days trading horizon Pha Lai is expected to generate 1.09 times less return on investment than Van Dien. But when comparing it to its historical volatility, Pha Lai Thermal is 4.63 times less risky than Van Dien. It trades about 0.11 of its potential returns per unit of risk. Van Dien Fused is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 1,395,000 in Van Dien Fused on September 16, 2024 and sell it today you would earn a total of 5,000 from holding Van Dien Fused or generate 0.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 50.0% |
| Values | Daily Returns |
Pha Lai Thermal vs. Van Dien Fused
Performance |
| Timeline |
| Pha Lai Thermal |
| Van Dien Fused |
Pha Lai and Van Dien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Pha Lai and Van Dien
The main advantage of trading using opposite Pha Lai and Van Dien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pha Lai position performs unexpectedly, Van Dien 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 Van Dien will offset losses from the drop in Van Dien's long position.| Pha Lai vs. Ha Long Investment | Pha Lai vs. VTC Telecommunications JSC | Pha Lai vs. Tien Giang Investment | Pha Lai vs. Vu Dang Investment |
| Van Dien vs. Pha Lai Thermal | Van Dien vs. BIDV Insurance Corp | Van Dien vs. Elcom Technology Communications | Van Dien vs. CEO Group JSC |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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