Correlation Between Tri Viet and Thanh Dat
Can any of the company-specific risk be diversified away by investing in both Tri Viet and Thanh Dat 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 Tri Viet and Thanh Dat into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Tri Viet Management and Thanh Dat Investment, you can compare the effects of market volatilities on Tri Viet and Thanh Dat 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 Tri Viet with a short position of Thanh Dat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Tri Viet and Thanh Dat.
Diversification Opportunities for Tri Viet and Thanh Dat
Poor diversification
The 3 months correlation between Tri and Thanh is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Tri Viet Management and Thanh Dat Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Dat Investment and Tri Viet 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 Tri Viet Management are associated (or correlated) with Thanh Dat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Dat Investment has no effect on the direction of Tri Viet i.e., Tri Viet and Thanh Dat go up and down completely randomly.
Pair Corralation between Tri Viet and Thanh Dat
Assuming the 90 days trading horizon Tri Viet Management is expected to generate 0.94 times more return on investment than Thanh Dat. However, Tri Viet Management is 1.06 times less risky than Thanh Dat. It trades about -0.12 of its potential returns per unit of risk. Thanh Dat Investment is currently generating about -0.18 per unit of risk. If you would invest 1,000,000 in Tri Viet Management on November 7, 2024 and sell it today you would lose (40,000) from holding Tri Viet Management or give up 4.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Tri Viet Management vs. Thanh Dat Investment
Performance |
| Timeline |
| Tri Viet Management |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Thanh Dat Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Tri Viet and Thanh Dat Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Tri Viet and Thanh Dat
The main advantage of trading using opposite Tri Viet and Thanh Dat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Tri Viet position performs unexpectedly, Thanh Dat 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 Thanh Dat will offset losses from the drop in Thanh Dat's long position.The idea behind Tri Viet Management and Thanh Dat Investment 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.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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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