Correlation Between Vietnam Dairy and Hanoi Beer
Can any of the company-specific risk be diversified away by investing in both Vietnam Dairy and Hanoi Beer 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 Vietnam Dairy and Hanoi Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vietnam Dairy Products and Hanoi Beer Alcohol, you can compare the effects of market volatilities on Vietnam Dairy and Hanoi Beer 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 Vietnam Dairy with a short position of Hanoi Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Dairy and Hanoi Beer.
Diversification Opportunities for Vietnam Dairy and Hanoi Beer
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between Vietnam and Hanoi is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Dairy Products and Hanoi Beer Alcohol in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Beer Alcohol and Vietnam Dairy 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 Vietnam Dairy Products are associated (or correlated) with Hanoi Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Beer Alcohol has no effect on the direction of Vietnam Dairy i.e., Vietnam Dairy and Hanoi Beer go up and down completely randomly.
Pair Corralation between Vietnam Dairy and Hanoi Beer
Assuming the 90 days trading horizon Vietnam Dairy Products is expected to under-perform the Hanoi Beer. But the stock apears to be less risky and, when comparing its historical volatility, Vietnam Dairy Products is 1.2 times less risky than Hanoi Beer. The stock trades about -0.01 of its potential returns per unit of risk. The Hanoi Beer Alcohol is currently generating about -0.01 of returns per unit of risk over similar time horizon. If you would invest 4,236,556 in Hanoi Beer Alcohol on September 4, 2024 and sell it today you would lose (436,556) from holding Hanoi Beer Alcohol or give up 10.3% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 93.69% |
| Values | Daily Returns |
Vietnam Dairy Products vs. Hanoi Beer Alcohol
Performance |
| Timeline |
| Vietnam Dairy Products |
| Hanoi Beer Alcohol |
Vietnam Dairy and Hanoi Beer Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Dairy and Hanoi Beer
The main advantage of trading using opposite Vietnam Dairy and Hanoi Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Dairy position performs unexpectedly, Hanoi Beer 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 Hanoi Beer will offset losses from the drop in Hanoi Beer's long position.| Vietnam Dairy vs. Elcom Technology Communications | Vietnam Dairy vs. Hai An Transport | Vietnam Dairy vs. FPT Digital Retail | Vietnam Dairy vs. Japan Vietnam Medical |
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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