Correlation Between Book and Van Dien
Can any of the company-specific risk be diversified away by investing in both Book 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 Book and Van Dien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Book And Educational and Van Dien Fused, you can compare the effects of market volatilities on Book 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 Book with a short position of Van Dien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Book and Van Dien.
Diversification Opportunities for Book and Van Dien
Good diversification
The 3 months correlation between Book and Van is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Book And Educational 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 Book 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 Book And Educational 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 Book i.e., Book and Van Dien go up and down completely randomly.
Pair Corralation between Book and Van Dien
Assuming the 90 days trading horizon Book is expected to generate 10.79 times less return on investment than Van Dien. But when comparing it to its historical volatility, Book And Educational is 1.49 times less risky than Van Dien. It trades about 0.01 of its potential returns per unit of risk. Van Dien Fused is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,335,000 in Van Dien Fused on October 23, 2024 and sell it today you would earn a total of 75,000 from holding Van Dien Fused or generate 5.62% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 50.0% |
| Values | Daily Returns |
Book And Educational vs. Van Dien Fused
Performance |
| Timeline |
| Book And Educational |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
| Van Dien Fused |
Book and Van Dien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Book and Van Dien
The main advantage of trading using opposite Book and Van Dien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Book 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.| Book vs. Vietnam Petroleum Transport | Book vs. SMC Investment Trading | Book vs. PV2 Investment JSC | Book vs. LDG Investment JSC |
| Van Dien vs. South Basic Chemicals | Van Dien vs. FPT Corp | Van Dien vs. BIDV Insurance Corp | Van Dien vs. Japan Vietnam Medical |
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 Anywhere module to track or share privately all of your investments from the convenience of any device.
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