Correlation Between Thong Nhat and Danang Education
Can any of the company-specific risk be diversified away by investing in both Thong Nhat and Danang Education 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 Thong Nhat and Danang Education into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Thong Nhat Rubber and Danang Education Investment, you can compare the effects of market volatilities on Thong Nhat and Danang Education 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 Thong Nhat with a short position of Danang Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thong Nhat and Danang Education.
Diversification Opportunities for Thong Nhat and Danang Education
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Thong and Danang is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Thong Nhat Rubber and Danang Education Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Education Inv and Thong Nhat 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 Thong Nhat Rubber are associated (or correlated) with Danang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Education Inv has no effect on the direction of Thong Nhat i.e., Thong Nhat and Danang Education go up and down completely randomly.
Pair Corralation between Thong Nhat and Danang Education
Assuming the 90 days trading horizon Thong Nhat Rubber is expected to generate 1.5 times more return on investment than Danang Education. However, Thong Nhat is 1.5 times more volatile than Danang Education Investment. It trades about 0.06 of its potential returns per unit of risk. Danang Education Investment is currently generating about -0.02 per unit of risk. If you would invest 3,390,000 in Thong Nhat Rubber on November 7, 2024 and sell it today you would earn a total of 60,000 from holding Thong Nhat Rubber or generate 1.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 56.25% |
| Values | Daily Returns |
Thong Nhat Rubber vs. Danang Education Investment
Performance |
| Timeline |
| Thong Nhat Rubber |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Danang Education Inv |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Weak
Thong Nhat and Danang Education Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thong Nhat and Danang Education
The main advantage of trading using opposite Thong Nhat and Danang Education positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thong Nhat position performs unexpectedly, Danang Education 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 Education will offset losses from the drop in Danang Education's long position.| Thong Nhat vs. Transport and Industry | Thong Nhat vs. Elcom Technology Communications | Thong Nhat vs. Binhthuan Agriculture Services | Thong Nhat vs. Hai An Transport |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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