Correlation Between Truong Thanh and HVC Investment
Can any of the company-specific risk be diversified away by investing in both Truong Thanh and HVC Investment 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 Truong Thanh and HVC Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Truong Thanh Furniture and HVC Investment and, you can compare the effects of market volatilities on Truong Thanh and HVC Investment 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 Truong Thanh with a short position of HVC Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Truong Thanh and HVC Investment.
Diversification Opportunities for Truong Thanh and HVC Investment
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Truong and HVC is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Truong Thanh Furniture and HVC Investment and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HVC Investment and Truong Thanh 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 Truong Thanh Furniture are associated (or correlated) with HVC Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HVC Investment has no effect on the direction of Truong Thanh i.e., Truong Thanh and HVC Investment go up and down completely randomly.
Pair Corralation between Truong Thanh and HVC Investment
Assuming the 90 days trading horizon Truong Thanh Furniture is expected to under-perform the HVC Investment. But the stock apears to be less risky and, when comparing its historical volatility, Truong Thanh Furniture is 1.06 times less risky than HVC Investment. The stock trades about -0.02 of its potential returns per unit of risk. The HVC Investment and is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 469,000 in HVC Investment and on September 14, 2024 and sell it today you would earn a total of 431,000 from holding HVC Investment and or generate 91.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Truong Thanh Furniture vs. HVC Investment and
Performance |
| Timeline |
| Truong Thanh Furniture |
| HVC Investment |
Truong Thanh and HVC Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Truong Thanh and HVC Investment
The main advantage of trading using opposite Truong Thanh and HVC Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Truong Thanh position performs unexpectedly, HVC Investment 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 HVC Investment will offset losses from the drop in HVC Investment's long position.| Truong Thanh vs. FIT INVEST JSC | Truong Thanh vs. Damsan JSC | Truong Thanh vs. An Phat Plastic | Truong Thanh vs. Alphanam ME |
| HVC Investment vs. FIT INVEST JSC | HVC Investment vs. Damsan JSC | HVC Investment vs. An Phat Plastic | HVC Investment vs. Alphanam ME |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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