Correlation Between Binhthuan Agriculture and Da Nang

Can any of the company-specific risk be diversified away by investing in both Binhthuan Agriculture and Da Nang 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 Binhthuan Agriculture and Da Nang into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Binhthuan Agriculture Services and Da Nang Construction, you can compare the effects of market volatilities on Binhthuan Agriculture and Da Nang 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 Binhthuan Agriculture with a short position of Da Nang. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binhthuan Agriculture and Da Nang.

Diversification Opportunities for Binhthuan Agriculture and Da Nang

0.11

Correlation Coefficient

Binhthuan Agriculture  Da Nang

Average diversification

The 3 months correlation between Binhthuan and DXV is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Da Nang Construction in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Da Nang Construction and Binhthuan Agriculture 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 Binhthuan Agriculture Services are associated (or correlated) with Da Nang. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Da Nang Construction has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Da Nang go up and down completely randomly.

Pair Corralation between Binhthuan Agriculture and Da Nang

Assuming the 90 days trading horizon Binhthuan Agriculture is expected to generate 1.27 times less return on investment than Da Nang. But when comparing it to its historical volatility, Binhthuan Agriculture Services is 1.66 times less risky than Da Nang. It trades about 0.12 of its potential returns per unit of risk. Da Nang Construction is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  380,000  in Da Nang Construction on December 5, 2024 and sell it today you would earn a total of  18,000  from holding Da Nang Construction or generate 4.74% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	95.45%
Values	Daily Returns

Binhthuan Agriculture Services  vs.  Da Nang Construction

Binhthuan Agriculture

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binhthuan Agriculture Services are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Binhthuan Agriculture displayed solid returns over the last few months and may actually be approaching a breakup point.

Da Nang Construction

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Da Nang Construction are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Da Nang may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Binhthuan Agriculture and Da Nang

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

The idea behind Binhthuan Agriculture Services and Da Nang Construction 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.