Correlation Between Ben Thanh and Ngan Son

Can any of the company-specific risk be diversified away by investing in both Ben Thanh and Ngan Son 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 Ngan Son 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 Ngan Son JSC, you can compare the effects of market volatilities on Ben Thanh and Ngan Son 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 Ngan Son. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ben Thanh and Ngan Son.

Diversification Opportunities for Ben Thanh and Ngan Son

-0.06

Correlation Coefficient

Ben Thanh  Ngan Son

Good diversification

The 3 months correlation between Ben and Ngan is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Ben Thanh Rubber and Ngan Son JSC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ngan Son 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 Ngan Son. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ngan Son JSC has no effect on the direction of Ben Thanh i.e., Ben Thanh and Ngan Son go up and down completely randomly.

Pair Corralation between Ben Thanh and Ngan Son

Assuming the 90 days trading horizon Ben Thanh Rubber is expected to generate 0.36 times more return on investment than Ngan Son. However, Ben Thanh Rubber is 2.75 times less risky than Ngan Son. It trades about 0.19 of its potential returns per unit of risk. Ngan Son JSC is currently generating about -0.06 per unit of risk. If you would invest  1,330,000  in Ben Thanh Rubber on October 22, 2024 and sell it today you would earn a total of  155,000  from holding Ben Thanh Rubber or generate 11.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	46.88%
Values	Daily Returns

Ben Thanh Rubber  vs.  Ngan Son JSC

Ben Thanh Rubber

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Ben Thanh Rubber are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Ben Thanh may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Ngan Son JSC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ngan Son JSC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic 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 Ben Thanh and Ngan Son

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

The idea behind Ben Thanh Rubber and Ngan Son 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.

Check out your portfolio center.

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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.