Correlation Between Transimex Transportation and Phuoc Hoa
Can any of the company-specific risk be diversified away by investing in both Transimex Transportation and Phuoc Hoa 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 Transimex Transportation and Phuoc Hoa into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Transimex Transportation JSC and Phuoc Hoa Rubber, you can compare the effects of market volatilities on Transimex Transportation and Phuoc Hoa 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 Transimex Transportation with a short position of Phuoc Hoa. Check out your portfolio center. Please also check ongoing floating volatility patterns of Transimex Transportation and Phuoc Hoa.
Diversification Opportunities for Transimex Transportation and Phuoc Hoa
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Transimex and Phuoc is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Transimex Transportation JSC and Phuoc Hoa Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Phuoc Hoa Rubber and Transimex Transportation 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 Transimex Transportation JSC are associated (or correlated) with Phuoc Hoa. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Phuoc Hoa Rubber has no effect on the direction of Transimex Transportation i.e., Transimex Transportation and Phuoc Hoa go up and down completely randomly.
Pair Corralation between Transimex Transportation and Phuoc Hoa
Assuming the 90 days trading horizon Transimex Transportation JSC is expected to generate 1.49 times more return on investment than Phuoc Hoa. However, Transimex Transportation is 1.49 times more volatile than Phuoc Hoa Rubber. It trades about -0.01 of its potential returns per unit of risk. Phuoc Hoa Rubber is currently generating about -0.05 per unit of risk. If you would invest 1,786,931 in Transimex Transportation JSC on August 31, 2024 and sell it today you would lose (86,931) from holding Transimex Transportation JSC or give up 4.86% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 78.91% |
| Values | Daily Returns |
Transimex Transportation JSC vs. Phuoc Hoa Rubber
Performance |
| Timeline |
| Transimex Transportation |
| Phuoc Hoa Rubber |
Transimex Transportation and Phuoc Hoa Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Transimex Transportation and Phuoc Hoa
The main advantage of trading using opposite Transimex Transportation and Phuoc Hoa positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transimex Transportation position performs unexpectedly, Phuoc Hoa 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 Phuoc Hoa will offset losses from the drop in Phuoc Hoa's long position.The idea behind Transimex Transportation JSC and Phuoc Hoa 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.
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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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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