Correlation Between Tay Ninh and Bich Chi
Can any of the company-specific risk be diversified away by investing in both Tay Ninh and Bich Chi 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 Tay Ninh and Bich Chi into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tay Ninh Rubber and Bich Chi Food, you can compare the effects of market volatilities on Tay Ninh and Bich Chi 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 Tay Ninh with a short position of Bich Chi. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tay Ninh and Bich Chi.
Diversification Opportunities for Tay Ninh and Bich Chi
Poor diversification
The 3 months correlation between Tay and Bich is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Tay Ninh Rubber and Bich Chi Food in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bich Chi Food and Tay Ninh 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 Tay Ninh Rubber are associated (or correlated) with Bich Chi. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bich Chi Food has no effect on the direction of Tay Ninh i.e., Tay Ninh and Bich Chi go up and down completely randomly.
Pair Corralation between Tay Ninh and Bich Chi
Assuming the 90 days trading horizon Tay Ninh Rubber is expected to generate 0.81 times more return on investment than Bich Chi. However, Tay Ninh Rubber is 1.23 times less risky than Bich Chi. It trades about 0.35 of its potential returns per unit of risk. Bich Chi Food is currently generating about 0.01 per unit of risk. If you would invest 4,090,000 in Tay Ninh Rubber on September 2, 2024 and sell it today you would earn a total of 790,000 from holding Tay Ninh Rubber or generate 19.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 45.45% |
| Values | Daily Returns |
Tay Ninh Rubber vs. Bich Chi Food
Performance |
| Timeline |
| Tay Ninh Rubber |
| Bich Chi Food |
Tay Ninh and Bich Chi Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tay Ninh and Bich Chi
The main advantage of trading using opposite Tay Ninh and Bich Chi positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tay Ninh position performs unexpectedly, Bich Chi 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 Bich Chi will offset losses from the drop in Bich Chi's long position.| Tay Ninh vs. FIT INVEST JSC | Tay Ninh vs. Damsan JSC | Tay Ninh vs. An Phat Plastic | Tay Ninh vs. Alphanam ME |
| Bich Chi vs. Dong Nai Plastic | Bich Chi vs. Tay Ninh Rubber | Bich Chi vs. Vietnam Rubber Group | Bich Chi vs. Hung Hau Agricultural |
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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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