Correlation Between Bao Ngoc and BIDV Insurance

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

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

Diversification Opportunities for Bao Ngoc and BIDV Insurance

0.13

Correlation Coefficient

Bao Ngoc  BIDV Insurance

Average diversification

The 3 months correlation between Bao and BIDV is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Bao Ngoc Investment and BIDV Insurance Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BIDV Insurance Corp and Bao Ngoc 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 Bao Ngoc Investment are associated (or correlated) with BIDV Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BIDV Insurance Corp has no effect on the direction of Bao Ngoc i.e., Bao Ngoc and BIDV Insurance go up and down completely randomly.

Pair Corralation between Bao Ngoc and BIDV Insurance

Assuming the 90 days trading horizon Bao Ngoc is expected to generate 24.98 times less return on investment than BIDV Insurance. But when comparing it to its historical volatility, Bao Ngoc Investment is 1.2 times less risky than BIDV Insurance. It trades about 0.01 of its potential returns per unit of risk. BIDV Insurance Corp is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  3,325,000  in BIDV Insurance Corp on September 17, 2024 and sell it today you would earn a total of  165,000  from holding BIDV Insurance Corp or generate 4.96% return on investment over 90 days.

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

Bao Ngoc Investment  vs.  BIDV Insurance Corp

Bao Ngoc Investment

Risk-Adjusted Performance

0 of 100

Very Weak

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

BIDV Insurance Corp

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BIDV Insurance Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, BIDV Insurance may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bao Ngoc and BIDV Insurance

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

The idea behind Bao Ngoc Investment and BIDV Insurance 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.