Correlation Between Hanoi Beer and Damsan JSC

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

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

Diversification Opportunities for Hanoi Beer and Damsan JSC

-0.3

Correlation Coefficient

Hanoi Beer  Damsan JSC

Very good diversification

The 3 months correlation between Hanoi and Damsan is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Hanoi Beer Alcohol and Damsan JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Damsan JSC and Hanoi Beer 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 Hanoi Beer Alcohol are associated (or correlated) with Damsan JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Damsan JSC has no effect on the direction of Hanoi Beer i.e., Hanoi Beer and Damsan JSC go up and down completely randomly.

Pair Corralation between Hanoi Beer and Damsan JSC

Assuming the 90 days trading horizon Hanoi Beer Alcohol is expected to under-perform the Damsan JSC. But the stock apears to be less risky and, when comparing its historical volatility, Hanoi Beer Alcohol is 1.79 times less risky than Damsan JSC. The stock trades about -0.15 of its potential returns per unit of risk. The Damsan JSC is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  878,000  in Damsan JSC on September 26, 2024 and sell it today you would earn a total of  7,000  from holding Damsan JSC or generate 0.8% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	81.82%
Values	Daily Returns

Hanoi Beer Alcohol  vs.  Damsan JSC

Hanoi Beer Alcohol

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Hanoi Beer Alcohol 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.

Damsan JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Damsan JSC 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 basic 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.

Pair Trading with Hanoi Beer and Damsan JSC

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

The idea behind Hanoi Beer Alcohol and Damsan JSC 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.