Correlation Between Bao Ngoc and Danang Education

Can any of the company-specific risk be diversified away by investing in both Bao Ngoc and Danang Education 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 Danang Education 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 Danang Education Investment, you can compare the effects of market volatilities on Bao Ngoc and Danang Education 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 Danang Education. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bao Ngoc and Danang Education.

Diversification Opportunities for Bao Ngoc and Danang Education

-0.05

Correlation Coefficient

Bao Ngoc  Danang Education

Good diversification

The 3 months correlation between Bao and Danang is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Bao Ngoc Investment and Danang Education Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Danang Education Inv 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 Danang Education. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Danang Education Inv has no effect on the direction of Bao Ngoc i.e., Bao Ngoc and Danang Education go up and down completely randomly.

Pair Corralation between Bao Ngoc and Danang Education

Assuming the 90 days trading horizon Bao Ngoc Investment is expected to generate 0.42 times more return on investment than Danang Education. However, Bao Ngoc Investment is 2.36 times less risky than Danang Education. It trades about 0.01 of its potential returns per unit of risk. Danang Education Investment is currently generating about -0.01 per unit of risk. If you would invest  960,000  in Bao Ngoc Investment on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Bao Ngoc Investment or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	71.43%
Values	Daily Returns

Bao Ngoc Investment  vs.  Danang Education Investment

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.

Danang Education Inv

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Danang Education Investment has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's fundamental indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the firm investors.

Pair Trading with Bao Ngoc and Danang Education

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

The idea behind Bao Ngoc Investment and Danang Education Investment 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.