Correlation Between Damsan JSC and Thanh Thanh

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

Diversification Opportunities for Damsan JSC and Thanh Thanh

0.69

Correlation Coefficient

Damsan JSC  Thanh Thanh

Poor diversification

The 3 months correlation between Damsan and Thanh is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding Damsan JSC and Thanh Thanh Cong in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thanh Thanh Cong 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 Thanh Thanh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thanh Thanh Cong has no effect on the direction of Damsan JSC i.e., Damsan JSC and Thanh Thanh go up and down completely randomly.

Pair Corralation between Damsan JSC and Thanh Thanh

Assuming the 90 days trading horizon Damsan JSC is expected to generate 5.87 times less return on investment than Thanh Thanh. In addition to that, Damsan JSC is 1.05 times more volatile than Thanh Thanh Cong. It trades about 0.05 of its total potential returns per unit of risk. Thanh Thanh Cong is currently generating about 0.31 per unit of volatility. If you would invest  1,163,640  in Thanh Thanh Cong on December 22, 2024 and sell it today you would earn a total of  346,360  from holding Thanh Thanh Cong or generate 29.77% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Damsan JSC  vs.  Thanh Thanh Cong

Damsan JSC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Damsan JSC are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Damsan JSC is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Thanh Thanh Cong

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Thanh Thanh Cong are ranked lower than 24 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Thanh Thanh displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Damsan JSC and Thanh Thanh

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

The idea behind Damsan JSC and Thanh Thanh Cong 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.