Correlation Between Ben Thanh and Idico JSC

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

By analyzing existing cross correlation between Ben Thanh Rubber and Idico JSC, you can compare the effects of market volatilities on Ben Thanh and Idico JSC 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 Ben Thanh with a short position of Idico JSC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ben Thanh and Idico JSC.

Diversification Opportunities for Ben Thanh and Idico JSC

-0.37

Correlation Coefficient

Ben Thanh  Idico JSC

Very good diversification

The 3 months correlation between Ben and Idico is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Ben Thanh Rubber and Idico JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idico JSC and Ben Thanh 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 Ben Thanh Rubber are associated (or correlated) with Idico JSC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idico JSC has no effect on the direction of Ben Thanh i.e., Ben Thanh and Idico JSC go up and down completely randomly.

Pair Corralation between Ben Thanh and Idico JSC

Assuming the 90 days trading horizon Ben Thanh is expected to generate 1.58 times less return on investment than Idico JSC. But when comparing it to its historical volatility, Ben Thanh Rubber is 1.03 times less risky than Idico JSC. It trades about 0.03 of its potential returns per unit of risk. Idico JSC is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  5,550,000  in Idico JSC on December 2, 2024 and sell it today you would earn a total of  170,000  from holding Idico JSC or generate 3.06% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.33%
Values	Daily Returns

Ben Thanh Rubber  vs.  Idico JSC

Ben Thanh Rubber

Risk-Adjusted Performance

Weak

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

Idico JSC

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Idico JSC are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy fundamental indicators, Idico JSC is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Ben Thanh and Idico JSC

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

The idea behind Ben Thanh Rubber and Idico 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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.