Correlation Between Binh Duong and South Basic
Can any of the company-specific risk be diversified away by investing in both Binh Duong and South Basic 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 Binh Duong and South Basic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Binh Duong Trade and South Basic Chemicals, you can compare the effects of market volatilities on Binh Duong and South Basic 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 Binh Duong with a short position of South Basic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Duong and South Basic.
Diversification Opportunities for Binh Duong and South Basic
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Binh and South is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Binh Duong Trade and South Basic Chemicals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on South Basic Chemicals and Binh Duong 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 Binh Duong Trade are associated (or correlated) with South Basic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of South Basic Chemicals has no effect on the direction of Binh Duong i.e., Binh Duong and South Basic go up and down completely randomly.
Pair Corralation between Binh Duong and South Basic
Assuming the 90 days trading horizon Binh Duong is expected to generate 4.28 times less return on investment than South Basic. But when comparing it to its historical volatility, Binh Duong Trade is 1.48 times less risky than South Basic. It trades about 0.02 of its potential returns per unit of risk. South Basic Chemicals is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 3,880,000 in South Basic Chemicals on October 18, 2024 and sell it today you would earn a total of 320,000 from holding South Basic Chemicals or generate 8.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Binh Duong Trade vs. South Basic Chemicals
Performance |
| Timeline |
| Binh Duong Trade |
| South Basic Chemicals |
Binh Duong and South Basic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Binh Duong and South Basic
The main advantage of trading using opposite Binh Duong and South Basic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Binh Duong position performs unexpectedly, South Basic 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 South Basic will offset losses from the drop in South Basic's long position.| Binh Duong vs. Song Hong Aluminum | Binh Duong vs. CEO Group JSC | Binh Duong vs. Saigon Beer Alcohol | Binh Duong vs. PetroVietnam Transportation Corp |
| South Basic vs. Hai An Transport | South Basic vs. Hochiminh City Metal | South Basic vs. Binh Duong Trade | South Basic vs. Pacific Petroleum Transportation |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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