Correlation Between Damsan JSC and Ben Thanh

Can any of the company-specific risk be diversified away by investing in both Damsan JSC and Ben 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 Damsan JSC and Ben Thanh into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Damsan JSC and Ben Thanh Trading, you can compare the effects of market volatilities on Damsan JSC and Ben 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 Damsan JSC with a short position of Ben Thanh. Check out your portfolio center. Please also check ongoing floating volatility patterns of Damsan JSC and Ben Thanh.

Diversification Opportunities for Damsan JSC and Ben Thanh

-0.16

Correlation Coefficient

Damsan JSC  Ben Thanh

Good diversification

The 3 months correlation between Damsan and Ben is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and Ben Thanh Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ben Thanh Trading and Damsan JSC 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 Damsan JSC are associated (or correlated) with Ben Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ben Thanh Trading has no effect on the direction of Damsan JSC i.e., Damsan JSC and Ben Thanh go up and down completely randomly.

Pair Corralation between Damsan JSC and Ben Thanh

Assuming the 90 days trading horizon Damsan JSC is expected to generate 0.31 times more return on investment than Ben Thanh. However, Damsan JSC is 3.28 times less risky than Ben Thanh. It trades about -0.32 of its potential returns per unit of risk. Ben Thanh Trading is currently generating about -0.32 per unit of risk. If you would invest  889,000  in Damsan JSC on October 27, 2024 and sell it today you would lose (60,000) from holding Damsan JSC or give up 6.75% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	23.81%
Values	Daily Returns

Damsan JSC  vs.  Ben Thanh Trading

Damsan JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Damsan JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Ben Thanh Trading

Risk-Adjusted Performance

0 of 100

OK

Over the last 90 days Ben Thanh Trading has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very unfluctuating basic indicators, Ben Thanh displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Damsan JSC and Ben Thanh

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

The idea behind Damsan JSC and Ben Thanh Trading 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.