Correlation Between BaoMinh Insurance and Ngan Son

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

By analyzing existing cross correlation between BaoMinh Insurance Corp and Ngan Son JSC, you can compare the effects of market volatilities on BaoMinh Insurance and Ngan Son 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 BaoMinh Insurance with a short position of Ngan Son. Check out your portfolio center. Please also check ongoing floating volatility patterns of BaoMinh Insurance and Ngan Son.

Diversification Opportunities for BaoMinh Insurance and Ngan Son

0.2

Correlation Coefficient

BaoMinh Insurance  Ngan Son

Modest diversification

The 3 months correlation between BaoMinh and Ngan is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding BaoMinh Insurance Corp and Ngan Son JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngan Son JSC and BaoMinh Insurance 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 BaoMinh Insurance Corp are associated (or correlated) with Ngan Son. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngan Son JSC has no effect on the direction of BaoMinh Insurance i.e., BaoMinh Insurance and Ngan Son go up and down completely randomly.

Pair Corralation between BaoMinh Insurance and Ngan Son

Assuming the 90 days trading horizon BaoMinh Insurance is expected to generate 11.37 times less return on investment than Ngan Son. But when comparing it to its historical volatility, BaoMinh Insurance Corp is 1.75 times less risky than Ngan Son. It trades about 0.01 of its potential returns per unit of risk. Ngan Son JSC is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  544,017  in Ngan Son JSC on October 24, 2024 and sell it today you would earn a total of  505,983  from holding Ngan Son JSC or generate 93.01% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	70.77%
Values	Daily Returns

BaoMinh Insurance Corp  vs.  Ngan Son JSC

BaoMinh Insurance Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BaoMinh Insurance Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy forward indicators, BaoMinh Insurance is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Ngan Son JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ngan Son JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Ngan Son is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BaoMinh Insurance and Ngan Son

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

The idea behind BaoMinh Insurance Corp and Ngan Son 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.