Correlation Between Alphanam and Hanoi Beer

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

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

Diversification Opportunities for Alphanam and Hanoi Beer

-0.1

Correlation Coefficient

Alphanam  Hanoi Beer

Good diversification

The 3 months correlation between Alphanam and Hanoi is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Hanoi Beer Trading in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hanoi Beer Trading and Alphanam 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 Alphanam ME are associated (or correlated) with Hanoi Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hanoi Beer Trading has no effect on the direction of Alphanam i.e., Alphanam and Hanoi Beer go up and down completely randomly.

Pair Corralation between Alphanam and Hanoi Beer

Assuming the 90 days trading horizon Alphanam ME is expected to under-perform the Hanoi Beer. In addition to that, Alphanam is 1.14 times more volatile than Hanoi Beer Trading. It trades about -0.21 of its total potential returns per unit of risk. Hanoi Beer Trading is currently generating about -0.04 per unit of volatility. If you would invest  4,406,861  in Hanoi Beer Trading on September 13, 2024 and sell it today you would lose (156,861) from holding Hanoi Beer Trading or give up 3.56% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.24%
Values	Daily Returns

Alphanam ME  vs.  Hanoi Beer Trading

Alphanam ME

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Alphanam ME 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 technical and fundamental indicators remain very healthy which may send shares a bit higher in January 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Hanoi Beer Trading

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Alphanam and Hanoi Beer

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

The idea behind Alphanam ME and Hanoi Beer 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.

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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.