Correlation Between Vien Dong and Hai An
Can any of the company-specific risk be diversified away by investing in both Vien Dong and Hai An 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 Vien Dong and Hai An into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vien Dong Investment and Hai An Transport, you can compare the effects of market volatilities on Vien Dong and Hai An 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 Vien Dong with a short position of Hai An. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vien Dong and Hai An.
Diversification Opportunities for Vien Dong and Hai An
Pay attention - limited upside
The 3 months correlation between Vien and Hai is -0.75. Overlapping area represents the amount of risk that can be diversified away by holding Vien Dong Investment and Hai An Transport in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hai An Transport and Vien Dong 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 Vien Dong Investment are associated (or correlated) with Hai An. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hai An Transport has no effect on the direction of Vien Dong i.e., Vien Dong and Hai An go up and down completely randomly.
Pair Corralation between Vien Dong and Hai An
Assuming the 90 days trading horizon Vien Dong Investment is expected to generate 1.45 times more return on investment than Hai An. However, Vien Dong is 1.45 times more volatile than Hai An Transport. It trades about 0.22 of its potential returns per unit of risk. Hai An Transport is currently generating about 0.23 per unit of risk. If you would invest 494,000 in Vien Dong Investment on November 7, 2024 and sell it today you would earn a total of 44,000 from holding Vien Dong Investment or generate 8.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vien Dong Investment vs. Hai An Transport
Performance |
| Timeline |
| Vien Dong Investment |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Insignificant
| Hai An Transport |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
Vien Dong and Hai An Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vien Dong and Hai An
The main advantage of trading using opposite Vien Dong and Hai An positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vien Dong position performs unexpectedly, Hai An 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 Hai An will offset losses from the drop in Hai An's long position.The idea behind Vien Dong Investment and Hai An Transport 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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