Correlation Between Binh Minh and Binh Thuan

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

By analyzing existing cross correlation between Binh Minh Plastics and Binh Thuan Books, you can compare the effects of market volatilities on Binh Minh and Binh Thuan 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 Binh Minh with a short position of Binh Thuan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Binh Minh and Binh Thuan.

Diversification Opportunities for Binh Minh and Binh Thuan

0.43

Correlation Coefficient

Binh Minh  Binh Thuan

Very weak diversification

The 3 months correlation between Binh and Binh is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Binh Minh Plastics and Binh Thuan Books in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Binh Thuan Books and Binh Minh 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 Binh Minh Plastics are associated (or correlated) with Binh Thuan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Binh Thuan Books has no effect on the direction of Binh Minh i.e., Binh Minh and Binh Thuan go up and down completely randomly.

Pair Corralation between Binh Minh and Binh Thuan

Assuming the 90 days trading horizon Binh Minh Plastics is expected to generate 0.39 times more return on investment than Binh Thuan. However, Binh Minh Plastics is 2.54 times less risky than Binh Thuan. It trades about 0.12 of its potential returns per unit of risk. Binh Thuan Books is currently generating about 0.04 per unit of risk. If you would invest  4,064,280  in Binh Minh Plastics on October 10, 2024 and sell it today you would earn a total of  9,425,720  from holding Binh Minh Plastics or generate 231.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	58.45%
Values	Daily Returns

Binh Minh Plastics  vs.  Binh Thuan Books

Binh Minh Plastics

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Binh Minh Plastics are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Binh Minh displayed solid returns over the last few months and may actually be approaching a breakup point.

Binh Thuan Books

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Binh Minh and Binh Thuan

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

The idea behind Binh Minh Plastics and Binh Thuan Books 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.