Correlation Between Thong Nhat and Ducgiang Chemicals
Can any of the company-specific risk be diversified away by investing in both Thong Nhat and Ducgiang Chemicals 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 Ducgiang Chemicals 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 Ducgiang Chemicals Detergent, you can compare the effects of market volatilities on Thong Nhat and Ducgiang Chemicals 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 Ducgiang Chemicals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Thong Nhat and Ducgiang Chemicals.
Diversification Opportunities for Thong Nhat and Ducgiang Chemicals
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Thong and Ducgiang is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Thong Nhat Rubber and Ducgiang Chemicals Detergent in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ducgiang Chemicals 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 Ducgiang Chemicals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ducgiang Chemicals has no effect on the direction of Thong Nhat i.e., Thong Nhat and Ducgiang Chemicals go up and down completely randomly.
Pair Corralation between Thong Nhat and Ducgiang Chemicals
Assuming the 90 days trading horizon Thong Nhat Rubber is expected to generate 4.05 times more return on investment than Ducgiang Chemicals. However, Thong Nhat is 4.05 times more volatile than Ducgiang Chemicals Detergent. It trades about 0.35 of its potential returns per unit of risk. Ducgiang Chemicals Detergent is currently generating about -0.03 per unit of risk. If you would invest 3,210,000 in Thong Nhat Rubber on November 28, 2024 and sell it today you would earn a total of 570,000 from holding Thong Nhat Rubber or generate 17.76% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 64.71% |
| Values | Daily Returns |
Thong Nhat Rubber vs. Ducgiang Chemicals Detergent
Performance |
| Timeline |
| Thong Nhat Rubber |
| Ducgiang Chemicals |
Thong Nhat and Ducgiang Chemicals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Thong Nhat and Ducgiang Chemicals
The main advantage of trading using opposite Thong Nhat and Ducgiang Chemicals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Thong Nhat position performs unexpectedly, Ducgiang Chemicals 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 Ducgiang Chemicals will offset losses from the drop in Ducgiang Chemicals' long position.| Thong Nhat vs. Vnsteel Vicasa JSC | Thong Nhat vs. Truong Thanh Furniture | Thong Nhat vs. Nam Kim Steel | Thong Nhat vs. Pha Lai Thermal |
| Ducgiang Chemicals vs. Hochiminh City Metal | Ducgiang Chemicals vs. Fecon Mining JSC | Ducgiang Chemicals vs. Danang Education Investment | Ducgiang Chemicals vs. Binh Duong Trade |
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 Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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