Correlation Between Mekong Fisheries and Hoang Huy

Can any of the company-specific risk be diversified away by investing in both Mekong Fisheries and Hoang Huy 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 Mekong Fisheries and Hoang Huy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mekong Fisheries JSC and Hoang Huy Investment, you can compare the effects of market volatilities on Mekong Fisheries and Hoang Huy 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 Mekong Fisheries with a short position of Hoang Huy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekong Fisheries and Hoang Huy.

Diversification Opportunities for Mekong Fisheries and Hoang Huy

-0.12

Correlation Coefficient

Mekong Fisheries  Hoang Huy

Good diversification

The 3 months correlation between Mekong and Hoang is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Mekong Fisheries JSC and Hoang Huy Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hoang Huy Investment and Mekong Fisheries 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 Mekong Fisheries JSC are associated (or correlated) with Hoang Huy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hoang Huy Investment has no effect on the direction of Mekong Fisheries i.e., Mekong Fisheries and Hoang Huy go up and down completely randomly.

Pair Corralation between Mekong Fisheries and Hoang Huy

Assuming the 90 days trading horizon Mekong Fisheries JSC is expected to under-perform the Hoang Huy. But the stock apears to be less risky and, when comparing its historical volatility, Mekong Fisheries JSC is 1.13 times less risky than Hoang Huy. The stock trades about -0.04 of its potential returns per unit of risk. The Hoang Huy Investment is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  681,132  in Hoang Huy Investment on October 15, 2024 and sell it today you would earn a total of  18,868  from holding Hoang Huy Investment or generate 2.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.86%
Values	Daily Returns

Mekong Fisheries JSC  vs.  Hoang Huy Investment

Mekong Fisheries JSC

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Mekong Fisheries JSC are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy primary indicators, Mekong Fisheries is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Hoang Huy Investment

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hoang Huy Investment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Hoang Huy is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mekong Fisheries and Hoang Huy

The main advantage of trading using opposite Mekong Fisheries and Hoang Huy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mekong Fisheries position performs unexpectedly, Hoang Huy 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 Hoang Huy will offset losses from the drop in Hoang Huy's long position.

The idea behind Mekong Fisheries JSC and Hoang Huy 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.

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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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.