Correlation Between Hanoi Beer and Tienlen Steel

Can any of the company-specific risk be diversified away by investing in both Hanoi Beer and Tienlen Steel 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 Tienlen Steel 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 Tienlen Steel Corp, you can compare the effects of market volatilities on Hanoi Beer and Tienlen Steel 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 Tienlen Steel. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hanoi Beer and Tienlen Steel.

Diversification Opportunities for Hanoi Beer and Tienlen Steel

-0.25

Correlation Coefficient

Hanoi Beer  Tienlen Steel

Very good diversification

The 3 months correlation between Hanoi and Tienlen is -0.25. Overlapping area represents the amount of risk that can be diversified away by holding Hanoi Beer Alcohol and Tienlen Steel Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tienlen Steel Corp 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 Tienlen Steel. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tienlen Steel Corp has no effect on the direction of Hanoi Beer i.e., Hanoi Beer and Tienlen Steel go up and down completely randomly.

Pair Corralation between Hanoi Beer and Tienlen Steel

Assuming the 90 days trading horizon Hanoi Beer Alcohol is expected to under-perform the Tienlen Steel. In addition to that, Hanoi Beer is 1.02 times more volatile than Tienlen Steel Corp. It trades about -0.02 of its total potential returns per unit of risk. Tienlen Steel Corp is currently generating about 0.16 per unit of volatility. If you would invest  459,000  in Tienlen Steel Corp on December 29, 2024 and sell it today you would earn a total of  110,000  from holding Tienlen Steel Corp or generate 23.97% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	74.58%
Values	Daily Returns

Hanoi Beer Alcohol  vs.  Tienlen Steel Corp

Hanoi Beer Alcohol

Risk-Adjusted Performance

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.

Tienlen Steel Corp

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tienlen Steel Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical indicators, Tienlen Steel displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Hanoi Beer and Tienlen Steel

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

The idea behind Hanoi Beer Alcohol and Tienlen Steel 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.