Correlation Between Ben Thanh and Transport

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

Diversification Opportunities for Ben Thanh and Transport

0.18

Correlation Coefficient

Ben Thanh  Transport

Average diversification

The 3 months correlation between Ben and Transport is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Ben Thanh Rubber and Transport and Industry in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transport and Industry 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 Transport. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transport and Industry has no effect on the direction of Ben Thanh i.e., Ben Thanh and Transport go up and down completely randomly.

Pair Corralation between Ben Thanh and Transport

Assuming the 90 days trading horizon Ben Thanh Rubber is expected to generate 0.36 times more return on investment than Transport. However, Ben Thanh Rubber is 2.81 times less risky than Transport. It trades about 0.0 of its potential returns per unit of risk. Transport and Industry is currently generating about -0.36 per unit of risk. If you would invest  1,435,000  in Ben Thanh Rubber on December 29, 2024 and sell it today you would lose (5,000) from holding Ben Thanh Rubber or give up 0.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.31%
Values	Daily Returns

Ben Thanh Rubber  vs.  Transport and Industry

Ben Thanh Rubber

Risk-Adjusted Performance

Very Weak

Over the last 90 days Ben Thanh Rubber has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Transport and Industry

Risk-Adjusted Performance

Very Weak

Over the last 90 days Transport and Industry has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's fundamental indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Ben Thanh and Transport

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

The idea behind Ben Thanh Rubber and Transport and Industry 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.