Correlation Between Construction JSC and Pha Le
Can any of the company-specific risk be diversified away by investing in both Construction JSC and Pha Le 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 Construction JSC and Pha Le into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Construction JSC No5 and Pha Le Plastics, you can compare the effects of market volatilities on Construction JSC and Pha Le 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 Construction JSC with a short position of Pha Le. Check out your portfolio center. Please also check ongoing floating volatility patterns of Construction JSC and Pha Le.
Diversification Opportunities for Construction JSC and Pha Le
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Construction and Pha is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Construction JSC No5 and Pha Le Plastics in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pha Le Plastics and Construction JSC 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 Construction JSC No5 are associated (or correlated) with Pha Le. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pha Le Plastics has no effect on the direction of Construction JSC i.e., Construction JSC and Pha Le go up and down completely randomly.
Pair Corralation between Construction JSC and Pha Le
Assuming the 90 days trading horizon Construction JSC No5 is expected to generate 1.54 times more return on investment than Pha Le. However, Construction JSC is 1.54 times more volatile than Pha Le Plastics. It trades about 0.32 of its potential returns per unit of risk. Pha Le Plastics is currently generating about 0.19 per unit of risk. If you would invest 2,000,000 in Construction JSC No5 on October 9, 2024 and sell it today you would earn a total of 200,000 from holding Construction JSC No5 or generate 10.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Construction JSC No5 vs. Pha Le Plastics
Performance |
| Timeline |
| Construction JSC No5 |
| Pha Le Plastics |
Construction JSC and Pha Le Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Construction JSC and Pha Le
The main advantage of trading using opposite Construction JSC and Pha Le positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Construction JSC position performs unexpectedly, Pha Le 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 Pha Le will offset losses from the drop in Pha Le's long position.| Construction JSC vs. Petrovietnam Technical Services | Construction JSC vs. Vina2 Investment and | Construction JSC vs. Petrolimex International Trading | Construction JSC vs. CEO Group JSC |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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