Correlation Between Post and Tin Nghia
Can any of the company-specific risk be diversified away by investing in both Post and Tin Nghia 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 Post and Tin Nghia into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Post and Telecommunications and Tin Nghia Industrial, you can compare the effects of market volatilities on Post and Tin Nghia 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 Post with a short position of Tin Nghia. Check out your portfolio center. Please also check ongoing floating volatility patterns of Post and Tin Nghia.
Diversification Opportunities for Post and Tin Nghia
Very poor diversification
The 3 months correlation between Post and Tin is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Post and Telecommunications and Tin Nghia Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tin Nghia Industrial and Post 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 Post and Telecommunications are associated (or correlated) with Tin Nghia. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tin Nghia Industrial has no effect on the direction of Post i.e., Post and Tin Nghia go up and down completely randomly.
Pair Corralation between Post and Tin Nghia
Assuming the 90 days trading horizon Post and Telecommunications is expected to generate 1.64 times more return on investment than Tin Nghia. However, Post is 1.64 times more volatile than Tin Nghia Industrial. It trades about 0.04 of its potential returns per unit of risk. Tin Nghia Industrial is currently generating about -0.13 per unit of risk. If you would invest 462,000 in Post and Telecommunications on August 24, 2024 and sell it today you would earn a total of 7,000 from holding Post and Telecommunications or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Post and Telecommunications vs. Tin Nghia Industrial
Performance |
| Timeline |
| Post and Telecommuni |
| Tin Nghia Industrial |
Post and Tin Nghia Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Post and Tin Nghia
The main advantage of trading using opposite Post and Tin Nghia positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Post position performs unexpectedly, Tin Nghia 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 Tin Nghia will offset losses from the drop in Tin Nghia's long position.The idea behind Post and Telecommunications and Tin Nghia Industrial 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.| Tin Nghia vs. FIT INVEST JSC | Tin Nghia vs. Damsan JSC | Tin Nghia vs. An Phat Plastic | Tin Nghia vs. APG Securities Joint |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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