Correlation Between Alphanam and Tay Ninh

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

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

Diversification Opportunities for Alphanam and Tay Ninh

-0.67

Correlation Coefficient

Alphanam  Tay Ninh

Excellent diversification

The 3 months correlation between Alphanam and Tay is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding Alphanam ME and Tay Ninh Rubber in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tay Ninh 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 Tay Ninh. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tay Ninh Rubber has no effect on the direction of Alphanam i.e., Alphanam and Tay Ninh go up and down completely randomly.

Pair Corralation between Alphanam and Tay Ninh

Assuming the 90 days trading horizon Alphanam is expected to generate 42.37 times less return on investment than Tay Ninh. But when comparing it to its historical volatility, Alphanam ME is 1.38 times less risky than Tay Ninh. It trades about 0.01 of its potential returns per unit of risk. Tay Ninh Rubber is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest  4,945,000  in Tay Ninh Rubber on December 1, 2024 and sell it today you would earn a total of  3,455,000  from holding Tay Ninh Rubber or generate 69.87% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	49.15%
Values	Daily Returns

Alphanam ME  vs.  Tay Ninh Rubber

Alphanam ME

Risk-Adjusted Performance

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 very healthy technical and fundamental indicators, Alphanam is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Tay Ninh Rubber

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Tay Ninh Rubber are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Tay Ninh displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Alphanam and Tay Ninh

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

The idea behind Alphanam ME and Tay Ninh 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.

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 Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.