Correlation Between Mekong Fisheries and Construction

Can any of the company-specific risk be diversified away by investing in both Mekong Fisheries and Construction 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 Construction 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 Construction And Investment, you can compare the effects of market volatilities on Mekong Fisheries and Construction 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 Construction. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mekong Fisheries and Construction.

Diversification Opportunities for Mekong Fisheries and Construction

0.05

Correlation Coefficient

Mekong Fisheries  Construction

Significant diversification

The 3 months correlation between Mekong and Construction is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Mekong Fisheries JSC and Construction And Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Construction And Inv 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 Construction. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Construction And Inv has no effect on the direction of Mekong Fisheries i.e., Mekong Fisheries and Construction go up and down completely randomly.

Pair Corralation between Mekong Fisheries and Construction

Assuming the 90 days trading horizon Mekong Fisheries JSC is expected to under-perform the Construction. In addition to that, Mekong Fisheries is 1.05 times more volatile than Construction And Investment. It trades about -0.01 of its total potential returns per unit of risk. Construction And Investment is currently generating about 0.13 per unit of volatility. If you would invest  3,840,000  in Construction And Investment on November 28, 2024 and sell it today you would earn a total of  670,000  from holding Construction And Investment or generate 17.45% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	96.55%
Values	Daily Returns

Mekong Fisheries JSC  vs.  Construction And Investment

Mekong Fisheries JSC

Risk-Adjusted Performance

Very Weak

Over the last 90 days Mekong Fisheries JSC has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Construction And Inv

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Construction And Investment are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Construction displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Mekong Fisheries and Construction

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

The idea behind Mekong Fisheries JSC and Construction And 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.