Correlation Between Binhthuan Agriculture and Viet Thanh

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

Diversification Opportunities for Binhthuan Agriculture and Viet Thanh

0.29

Correlation Coefficient

Binhthuan Agriculture  Viet Thanh

Modest diversification

The 3 months correlation between Binhthuan and Viet is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Binhthuan Agriculture Services and Viet Thanh Plastic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Viet Thanh Plastic 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 Viet Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Viet Thanh Plastic has no effect on the direction of Binhthuan Agriculture i.e., Binhthuan Agriculture and Viet Thanh go up and down completely randomly.

Pair Corralation between Binhthuan Agriculture and Viet Thanh

Assuming the 90 days trading horizon Binhthuan Agriculture Services is expected to under-perform the Viet Thanh. In addition to that, Binhthuan Agriculture is 1.23 times more volatile than Viet Thanh Plastic. It trades about -0.11 of its total potential returns per unit of risk. Viet Thanh Plastic is currently generating about 0.01 per unit of volatility. If you would invest  1,730,000  in Viet Thanh Plastic on December 30, 2024 and sell it today you would earn a total of  10,000  from holding Viet Thanh Plastic or generate 0.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Binhthuan Agriculture Services  vs.  Viet Thanh Plastic

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 unfluctuating performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Viet Thanh Plastic

Risk-Adjusted Performance

Weak

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

Pair Trading with Binhthuan Agriculture and Viet Thanh

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

The idea behind Binhthuan Agriculture Services and Viet Thanh Plastic 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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .