Correlation Between Vietnam Dairy and Duc Thanh
Can any of the company-specific risk be diversified away by investing in both Vietnam Dairy and Duc Thanh 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 Duc Thanh 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 Duc Thanh Wood, you can compare the effects of market volatilities on Vietnam Dairy and Duc Thanh 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 Duc Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vietnam Dairy and Duc Thanh.
Diversification Opportunities for Vietnam Dairy and Duc Thanh
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Vietnam and Duc is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Vietnam Dairy Products and Duc Thanh Wood in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Duc Thanh Wood 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 Duc Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Duc Thanh Wood has no effect on the direction of Vietnam Dairy i.e., Vietnam Dairy and Duc Thanh go up and down completely randomly.
Pair Corralation between Vietnam Dairy and Duc Thanh
Assuming the 90 days trading horizon Vietnam Dairy Products is expected to generate 0.63 times more return on investment than Duc Thanh. However, Vietnam Dairy Products is 1.59 times less risky than Duc Thanh. It trades about 0.11 of its potential returns per unit of risk. Duc Thanh Wood is currently generating about -0.24 per unit of risk. If you would invest 6,050,000 in Vietnam Dairy Products on November 27, 2024 and sell it today you would earn a total of 90,000 from holding Vietnam Dairy Products or generate 1.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vietnam Dairy Products vs. Duc Thanh Wood
Performance |
| Timeline |
| Vietnam Dairy Products |
| Duc Thanh Wood |
Vietnam Dairy and Duc Thanh Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vietnam Dairy and Duc Thanh
The main advantage of trading using opposite Vietnam Dairy and Duc Thanh positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vietnam Dairy position performs unexpectedly, Duc Thanh 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 Duc Thanh will offset losses from the drop in Duc Thanh's long position.| Vietnam Dairy vs. BIDV Insurance Corp | Vietnam Dairy vs. Vietnam National Reinsurance | Vietnam Dairy vs. Long An Food | Vietnam Dairy vs. Military Insurance Corp |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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