Correlation Between Tien Giang and Nafoods Group
Can any of the company-specific risk be diversified away by investing in both Tien Giang and Nafoods Group 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 Tien Giang and Nafoods Group into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tien Giang Investment and Nafoods Group JSC, you can compare the effects of market volatilities on Tien Giang and Nafoods Group 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 Tien Giang with a short position of Nafoods Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tien Giang and Nafoods Group.
Diversification Opportunities for Tien Giang and Nafoods Group
-0.49 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Tien and Nafoods is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Tien Giang Investment and Nafoods Group JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nafoods Group JSC and Tien Giang 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 Tien Giang Investment are associated (or correlated) with Nafoods Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nafoods Group JSC has no effect on the direction of Tien Giang i.e., Tien Giang and Nafoods Group go up and down completely randomly.
Pair Corralation between Tien Giang and Nafoods Group
Assuming the 90 days trading horizon Tien Giang Investment is expected to generate 3.18 times more return on investment than Nafoods Group. However, Tien Giang is 3.18 times more volatile than Nafoods Group JSC. It trades about 0.3 of its potential returns per unit of risk. Nafoods Group JSC is currently generating about 0.28 per unit of risk. If you would invest 4,965,000 in Tien Giang Investment on November 8, 2024 and sell it today you would earn a total of 545,000 from holding Tien Giang Investment or generate 10.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tien Giang Investment vs. Nafoods Group JSC
Performance |
| Timeline |
| Tien Giang Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| Nafoods Group JSC |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tien Giang and Nafoods Group Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tien Giang and Nafoods Group
The main advantage of trading using opposite Tien Giang and Nafoods Group positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tien Giang position performs unexpectedly, Nafoods Group 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 Nafoods Group will offset losses from the drop in Nafoods Group's long position.The idea behind Tien Giang Investment and Nafoods Group JSC 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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