Correlation Between Bich Chi and FPT Corp

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Can any of the company-specific risk be diversified away by investing in both Bich Chi and FPT Corp 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 Bich Chi and FPT Corp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bich Chi Food and FPT Corp, you can compare the effects of market volatilities on Bich Chi and FPT Corp 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 Bich Chi with a short position of FPT Corp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bich Chi and FPT Corp.

Diversification Opportunities for Bich Chi and FPT Corp

BichFPTDiversified AwayBichFPTDiversified Away100%
0.75
  Correlation Coefficient

Poor diversification

The 3 months correlation between Bich and FPT is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Bich Chi Food and FPT Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FPT Corp and Bich Chi 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 Bich Chi Food are associated (or correlated) with FPT Corp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FPT Corp has no effect on the direction of Bich Chi i.e., Bich Chi and FPT Corp go up and down completely randomly.

Pair Corralation between Bich Chi and FPT Corp

Assuming the 90 days trading horizon Bich Chi Food is expected to generate 2.08 times more return on investment than FPT Corp. However, Bich Chi is 2.08 times more volatile than FPT Corp. It trades about 0.11 of its potential returns per unit of risk. FPT Corp is currently generating about 0.1 per unit of risk. If you would invest  3,708,434  in Bich Chi Food on October 13, 2024 and sell it today you would earn a total of  291,566  from holding Bich Chi Food or generate 7.86% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy48.44%
ValuesDaily Returns

Bich Chi Food  vs.  FPT Corp

 Performance 
JavaScript chart by amCharts 3.21.15OctNovDec -505101520
JavaScript chart by amCharts 3.21.15BCF FPT
       Timeline  
Bich Chi Food 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Bich Chi Food are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, Bich Chi displayed solid returns over the last few months and may actually be approaching a breakup point.
JavaScript chart by amCharts 3.21.15SepOctNovDecJanOctNovDecJan34,00036,00038,00040,00042,000
FPT Corp 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in FPT Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, FPT Corp may actually be approaching a critical reversion point that can send shares even higher in February 2025.
JavaScript chart by amCharts 3.21.15NovDecJanDecJan130,000135,000140,000145,000150,000

Bich Chi and FPT Corp Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-10.39-7.78-5.17-2.560.04542.685.48.1310.85 0.050.100.150.20
JavaScript chart by amCharts 3.21.15BCF FPT
       Returns  

Pair Trading with Bich Chi and FPT Corp

The main advantage of trading using opposite Bich Chi and FPT Corp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bich Chi position performs unexpectedly, FPT Corp 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 FPT Corp will offset losses from the drop in FPT Corp's long position.
The idea behind Bich Chi Food and FPT Corp 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.

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