Correlation Between Binhthuan Agriculture and IDJ FINANCIAL

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

Diversification Opportunities for Binhthuan Agriculture and IDJ FINANCIAL

0.83

Correlation Coefficient

Binhthuan Agriculture  IDJ FINANCIAL

Very poor diversification

The 3 months correlation between Binhthuan and IDJ is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and IDJ FINANCIAL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on IDJ FINANCIAL 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 IDJ FINANCIAL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of IDJ FINANCIAL has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and IDJ FINANCIAL go up and down completely randomly.

Pair Corralation between Binhthuan Agriculture and IDJ FINANCIAL

Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to generate 1.03 times more return on investment than IDJ FINANCIAL. However, Binhthuan Agriculture is 1.03 times more volatile than IDJ FINANCIAL. It trades about -0.06 of its potential returns per unit of risk. IDJ FINANCIAL is currently generating about -0.12 per unit of risk. If you would invest  460,000  in Binhthuan Agriculture Services on December 31, 2024 and sell it today you would lose (29,000) from holding Binhthuan Agriculture Services or give up 6.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.31%
Values	Daily Returns

Binhthuan Agriculture Services  vs.  IDJ FINANCIAL

Binhthuan Agriculture

Risk-Adjusted Performance

Very Weak

Over the last 90 days Binhthuan Agriculture Services has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Binhthuan Agriculture is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

IDJ FINANCIAL

Risk-Adjusted Performance

Very Weak

Over the last 90 days IDJ FINANCIAL has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's forward-looking indicators remain very healthy which may send shares a bit higher in May 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Binhthuan Agriculture and IDJ FINANCIAL

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

The idea behind Binhthuan Agriculture Services and IDJ FINANCIAL 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.