Correlation Between TDT Investment and Ben Thanh

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Can any of the company-specific risk be diversified away by investing in both TDT Investment and Ben Thanh 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 TDT Investment and Ben Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between TDT Investment and and Ben Thanh Rubber, you can compare the effects of market volatilities on TDT Investment and Ben Thanh 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 TDT Investment with a short position of Ben Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of TDT Investment and Ben Thanh.

Diversification Opportunities for TDT Investment and Ben Thanh

0.7
  Correlation Coefficient

Poor diversification

The 3 months correlation between TDT and Ben is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding TDT Investment and and Ben Thanh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ben Thanh Rubber and TDT Investment 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 TDT Investment and are associated (or correlated) with Ben Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ben Thanh Rubber has no effect on the direction of TDT Investment i.e., TDT Investment and Ben Thanh go up and down completely randomly.

Pair Corralation between TDT Investment and Ben Thanh

Assuming the 90 days trading horizon TDT Investment is expected to generate 8.07 times less return on investment than Ben Thanh. But when comparing it to its historical volatility, TDT Investment and is 1.49 times less risky than Ben Thanh. It trades about 0.01 of its potential returns per unit of risk. Ben Thanh Rubber is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest  807,690  in Ben Thanh Rubber on November 1, 2024 and sell it today you would earn a total of  622,310  from holding Ben Thanh Rubber or generate 77.05% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy95.14%
ValuesDaily Returns

TDT Investment and  vs.  Ben Thanh Rubber

 Performance 
       Timeline  
TDT Investment 

Risk-Adjusted Performance

13 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in TDT Investment and are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, TDT Investment may actually be approaching a critical reversion point that can send shares even higher in March 2025.
Ben Thanh Rubber 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Ben Thanh Rubber are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Ben Thanh may actually be approaching a critical reversion point that can send shares even higher in March 2025.

TDT Investment and Ben Thanh Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with TDT Investment and Ben Thanh

The main advantage of trading using opposite TDT Investment and Ben Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if TDT Investment position performs unexpectedly, Ben Thanh 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 Ben Thanh will offset losses from the drop in Ben Thanh's long position.
The idea behind TDT Investment and and Ben Thanh Rubber 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.
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.

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