Correlation Between BaoMinh Insurance and Thien Long

Can any of the company-specific risk be diversified away by investing in both BaoMinh Insurance and Thien Long 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 Thien Long 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 Thien Long Group, you can compare the effects of market volatilities on BaoMinh Insurance and Thien Long 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 Thien Long. Check out your portfolio center. Please also check ongoing floating volatility patterns of BaoMinh Insurance and Thien Long.

Diversification Opportunities for BaoMinh Insurance and Thien Long

0.5

Correlation Coefficient

BaoMinh Insurance  Thien Long

Very weak diversification

The 3 months correlation between BaoMinh and Thien is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding BaoMinh Insurance Corp and Thien Long Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thien Long Group 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 Thien Long. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thien Long Group has no effect on the direction of BaoMinh Insurance i.e., BaoMinh Insurance and Thien Long go up and down completely randomly.

Pair Corralation between BaoMinh Insurance and Thien Long

Assuming the 90 days trading horizon BaoMinh Insurance is expected to generate 2.7 times less return on investment than Thien Long. In addition to that, BaoMinh Insurance is 1.05 times more volatile than Thien Long Group. It trades about 0.01 of its total potential returns per unit of risk. Thien Long Group is currently generating about 0.03 per unit of volatility. If you would invest  4,892,377  in Thien Long Group on October 25, 2024 and sell it today you would earn a total of  1,097,623  from holding Thien Long Group or generate 22.44% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

BaoMinh Insurance Corp  vs.  Thien Long Group

BaoMinh Insurance Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in BaoMinh Insurance Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy forward indicators, BaoMinh Insurance is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Thien Long Group

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Thien Long Group are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very weak technical and fundamental indicators, Thien Long displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BaoMinh Insurance and Thien Long

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

The idea behind BaoMinh Insurance Corp and Thien Long Group 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.