Correlation Between Century Synthetic and Danang Rubber
Can any of the company-specific risk be diversified away by investing in both Century Synthetic and Danang Rubber 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 Century Synthetic and Danang Rubber into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Century Synthetic Fiber and Danang Rubber JSC, you can compare the effects of market volatilities on Century Synthetic and Danang Rubber 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 Century Synthetic with a short position of Danang Rubber. Check out your portfolio center. Please also check ongoing floating volatility patterns of Century Synthetic and Danang Rubber.
Diversification Opportunities for Century Synthetic and Danang Rubber
0.47 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Century and Danang is 0.47. Overlapping area represents the amount of risk that can be diversified away by holding Century Synthetic Fiber and Danang Rubber JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Rubber JSC and Century Synthetic 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 Century Synthetic Fiber are associated (or correlated) with Danang Rubber. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Rubber JSC has no effect on the direction of Century Synthetic i.e., Century Synthetic and Danang Rubber go up and down completely randomly.
Pair Corralation between Century Synthetic and Danang Rubber
Assuming the 90 days trading horizon Century Synthetic Fiber is expected to under-perform the Danang Rubber. But the stock apears to be less risky and, when comparing its historical volatility, Century Synthetic Fiber is 1.63 times less risky than Danang Rubber. The stock trades about -0.14 of its potential returns per unit of risk. The Danang Rubber JSC is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 2,810,000 in Danang Rubber JSC on September 3, 2024 and sell it today you would earn a total of 45,000 from holding Danang Rubber JSC or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Century Synthetic Fiber vs. Danang Rubber JSC
Performance |
| Timeline |
| Century Synthetic Fiber |
| Danang Rubber JSC |
Century Synthetic and Danang Rubber Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Century Synthetic and Danang Rubber
The main advantage of trading using opposite Century Synthetic and Danang Rubber positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Century Synthetic position performs unexpectedly, Danang Rubber 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 Danang Rubber will offset losses from the drop in Danang Rubber's long position.| Century Synthetic vs. FIT INVEST JSC | Century Synthetic vs. Damsan JSC | Century Synthetic vs. An Phat Plastic | Century Synthetic vs. Alphanam ME |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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