Correlation Between Alphanam and Thong Nhat

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

By analyzing existing cross correlation between Alphanam ME and Thong Nhat Rubber, you can compare the effects of market volatilities on Alphanam and Thong Nhat 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 Thong Nhat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alphanam and Thong Nhat.

Diversification Opportunities for Alphanam and Thong Nhat

0.09

Correlation Coefficient

Alphanam  Thong Nhat

Significant diversification

The 3 months correlation between Alphanam and Thong is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Thong Nhat Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thong Nhat Rubber 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 Thong Nhat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thong Nhat Rubber has no effect on the direction of Alphanam i.e., Alphanam and Thong Nhat go up and down completely randomly.

Pair Corralation between Alphanam and Thong Nhat

Assuming the 90 days trading horizon Alphanam ME is expected to generate 0.81 times more return on investment than Thong Nhat. However, Alphanam ME is 1.24 times less risky than Thong Nhat. It trades about 0.22 of its potential returns per unit of risk. Thong Nhat Rubber is currently generating about -0.02 per unit of risk. If you would invest  480,000  in Alphanam ME on December 30, 2024 and sell it today you would earn a total of  150,000  from holding Alphanam ME or generate 31.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	73.33%
Values	Daily Returns

Alphanam ME  vs.  Thong Nhat Rubber

Alphanam ME

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Alphanam ME are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Alphanam displayed solid returns over the last few months and may actually be approaching a breakup point.

Thong Nhat Rubber

Risk-Adjusted Performance

Very Weak

Over the last 90 days Thong Nhat Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental indicators, Thong Nhat 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 Thong Nhat

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

The idea behind Alphanam ME and Thong Nhat Rubber 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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.